Why You Should Retain Owl Rock Capital (ORCC) in Your Portfolio
Owl Rock Capital Corporation ORCC has been favored by investors for a while now owing to its healthy revenue stream and a solid portfolio. In fact, it ended the March quarter with investments in 120 portfolio companies with an aggregate fair value of $11.2 billion.
It continues to seek opportunities in stable, large and recession-resistant businesses.
Its return on assets — a profitability measure — stands at 4.5%, higher than the industry's average of 3.1%. This reflects the company’s efficiency in utilizing its shareholders’ funds.
Now let’s see what makes this presently Zacks Rank #3 (Hold) stock an investor favorite.
This specialty finance company has been witnessing a surge in revenues since its inception in 2015. Its 2016-2020 CAGR of 129.4% is pretty impressive. In the first quarter of 2021, total investment income rose 8.3% year over year on the back of an expanded investment portfolio. A steady ascent in revenues, primarily from the rapidly-expanding interest income and growth strategies, bodes well for the company.
It recently tied up with Dyal Capital Partners to complete the pending business combination to form Blue Owl Capital Inc. OWL. The deal will concentrate on the two aspects of alternative asset management, namely Direct Lending and GP Capital Solutions. Per the earlier announcement, Blue Owl is expected to have $45 billion in assets.
The company’s inorganic growth story is consistently quite impressive. Owl Rock Capital Group and Owl Capital Partners announced their merger with Baltimore Acquisition Corp, a special purpose acquisition company. The company even added eight portfolio companies in the first quarter.
On the back of its solid financial position, Owl Rock Capital deploys capital to enhance its shareholder value. Its dividend yield stands at 8.5%, much higher than its industry's average of 1.1%. This should instill investors’ confidence in the stock.
The company flaunts great solvency level with $2.5 billion of liquidity. However, its times interest earned stands at 3.8X, way lower than the industry’s average of 8.3X.
Price Performance
Shares of the company have gained 20% in a year’s time, outperforming the industry's growth of 5.3%.
Image Source: Zacks Investment Research
Other stocks in the same space including XP Inc. XP and Virtu Financial, Inc. VIRT have also rallied 18.6% and 25%, respectively, in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Owl Rock Capital Corporation (ORCC) : Free Stock Analysis Report
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