Sound Point Meridian Capital (NYSE:SPMC) Releases Earnings Results, Misses Expectations By $0.01 EPS

Sound Point Meridian Capital (NYSE:SPMC) issued its earnings results on Thursday. The company reported $0.28 EPS for the quarter, missing the consensus estimate of $0.29 by ($0.01), Zacks reports.

Here are the key takeaways from Sound Point Meridian Capital’s conference call:

• Quarterly income did not cover the distribution: NII was $0.28 per share versus $0.60 per share in distributions. The company said spread tightening and higher model loss reserves for AI-impacted software loans weighed on income.
• NAV fell to $9.09 per share from $9.88, and the company’s estimated October NAV was lower still, at $8.41–$8.51. Management attributed the decline to realized losses, distributions exceeding NII, and weak market pricing for CLO equity.
• The company said its senior securities coverage ratio was 217% at quarter-end and declined in October, putting it closer to the 200% threshold it is focused on maintaining. Management cited portfolio trading and repayment of its senior facility as tools to manage the ratio, while noting that share repurchases could increase leverage.
• Management reported that monthly NII had risen from about $0.08 per share to more than $0.09 in the quarter and approximately $0.11 in October. It pointed to portfolio rotation, liability refinancing, expense control, and a temporary fee waiver as ways to narrow the gap with the distribution, though coverage remains short.
• Management sees potential for loan spreads and CLO equity income to improve if loan-market supply and demand move toward balance, and said it has begun to view some new-issue CLO opportunities more favorably. It also acknowledged continued uncertainty around credit quality, investor demand, and CLO equity valuations.

Sound Point Meridian Capital Stock Performance

Shares of NYSE SPMC traded up $0.36 during mid-day trading on Thursday, reaching $6.26. The company had a trading volume of 72,396 shares, compared to its average volume of 32,851. The stock has a fifty day moving average of $7.65 and a two-hundred day moving average of $9.74. The company has a market capitalization of $128.41 million, a price-to-earnings ratio of -1.08 and a beta of 1.39. Sound Point Meridian Capital has a 12-month low of $5.43 and a 12-month high of $16.67.

Wall Street Analyst Weigh In

A number of research analysts have recently weighed in on the company. Zacks Research upgraded Sound Point Meridian Capital from a “hold” rating to a “strong-buy” rating in a report on Tuesday, October 27th. B. Riley Financial reduced their price objective on Sound Point Meridian Capital from $10.50 to $10.00 and set a “neutral” rating for the company in a research note on Wednesday, August 12th. One analyst has rated the stock with a Strong Buy rating, one has assigned a Buy rating and two have assigned a Hold rating to the company’s stock. According to MarketBeat, Sound Point Meridian Capital currently has a consensus rating of “Moderate Buy” and a consensus price target of $15.12.

Sound Point Meridian Capital Company Profile

Sound Point Meridian Capital, Inc. is a publicly traded investment company focused on collateralized loan obligations (CLOs). It invests primarily in CLO equity and debt securities, which provide exposure to portfolios of corporate loans. Through these investments, the company participates in the financing of businesses whose loans are held in CLO portfolios. Its investment approach centers on selecting CLO securities rather than directly originating loans to companies. Sound Point Meridian Capital is externally managed by an affiliate of Sound Point Capital Management, a credit-focused investment manager.