Eagle Point Credit Company (ECC) AI Stock Analysis

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Eagle Point Credit Company

(NYSE:ECC)

67Neutral

Eagle Point Credit Company has a strong financial foundation with high profitability and no debt, but it faces risks from negative cash flows and revenue decline. The technical indicators suggest a downward trend, tempered by attractive valuation metrics such as a low P/E ratio and high dividend yield. The recent earnings call was positive overall, despite some challenges with realized losses and leverage. These factors result in a moderately positive outlook for the stock.

Eagle Point Credit Company (ECC) vs. S&P 500 (SPY)

Market Cap

N/A

Dividend Yield21.43%

Average Volume (3M)1.68M

Price to Earnings (P/E)9.1

Beta (1Y)0.45

Revenue Growth22.24%

EPS Growth-50.71%

CountryUS

EmployeesN/A

SectorFinancial

Sector Strength87

IndustryAsset Management

Share Statistics

EPS (TTM)0.24

Shares Outstanding120,183,480

10 Day Avg. Volume1,384,235

30 Day Avg. Volume1,679,491

Financial Highlights & Ratios

PEG Ratio-1.70

Price to Book (P/B)0.87

Price to Sales (P/S)0.00

P/FCF Ratio-25.03

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$9.50

Price Target Upside21.17% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Eagle Point Credit Company Business Overview & Revenue Model

Company DescriptionEagle Point Credit Company (ECC) is a publicly traded, closed-end investment company focused on investing in equity and junior debt tranches of collateralized loan obligations (CLOs). The company primarily targets leveraged loans, aiming to generate high current income and capital appreciation for its shareholders. Operating within the financial services sector, ECC leverages its expertise to navigate the complexities of structured finance and credit markets.

How the Company Makes MoneyEagle Point Credit Company generates revenue primarily through the income received from its investments in CLOs, including interest payments and distributions. CLOs are structured financial products backed by a pool of loans, typically to corporations with below-investment-grade credit ratings. ECC invests in the equity and junior debt tranches of these CLOs, which offer higher yield potential in exchange for greater risk. The company's earnings are significantly influenced by the performance of the underlying loan portfolios within the CLOs, as well as the broader credit market conditions. Key revenue streams include interest income, capital gains from the sale of investments, and management fees. ECC's ability to generate consistent returns is also supported by strategic partnerships with experienced CLO managers and leveraging its management team's expertise in credit analysis and investment management.

Eagle Point Credit Company Financial Statement Overview

Summary

Eagle Point Credit Company demonstrates strong profitability and financial stability with a robust equity position and no debt. However, challenges in revenue growth and cash flow management could pose risks. While the company shows resilience in maintaining profitability, addressing cash flow inefficiencies will be crucial for sustained growth and operational efficiency.

Income Statement

Positive

Eagle Point Credit Company has shown significant improvement in its income statement over the years. The company's gross profit margin in the latest year is 100%, and the net profit margin is approximately 87.6%, indicating strong profitability. However, the revenue has decreased year-over-year compared to 2023, which was higher. The EBIT and EBITDA margins are not calculable for the latest year, which poses a challenge in assessing operational efficiency comprehensively.

Balance Sheet

Positive

The balance sheet reflects a solid equity base with a high equity ratio of about 62.2%, indicating financial stability. The company has no debt, which reduces financial risk. However, the return on equity has decreased due to lower net income, presenting a potential area of concern for investors seeking high returns.

Cash Flow

Neutral

The cash flow statement shows challenges with negative operating cash flow, which could indicate operational inefficiencies. The free cash flow is also negative, signaling potential cash flow issues. Despite these, the company has managed to increase its financing cash flow significantly, which may support future liquidity needs.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
160.40M	97.61M	139.07M	-92.73M	140.84M	64.06M
	Gross Profit
129.91M	97.61M	139.07M	-119.87M	119.66M	49.04M
	EBIT
168.15M	-207.66M	101.15M	-87.68M	131.86M	60.89M
	EBITDA
82.85M	0.00	132.38M	-87.68M	0.00	0.00
	Net Income Common Stockholders
121.42M	85.49M	116.89M	-101.81M	131.86M	60.89M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
63.73M	42.22M	46.45M	56.83M	13.92M	4.76M
	Total Assets
299.84M	1.51B	954.49M	760.15M	768.04M	512.59M
	Total Debt
0.00	0.00	157.71M	150.77M	140.69M	92.80M
	Net Debt
-63.73M	-42.22M	111.27M	93.94M	126.78M	88.04M
	Total Liabilities
36.28M	568.58M	218.72M	260.89M	241.85M	150.93M
	Stockholders Equity
263.56M	936.87M	735.78M	499.27M	526.19M	361.66M
Cash Flow		Free Cash Flow
-5.22M	-429.00M	-81.57M	-74.97M	-114.71M	1.22M
	Operating Cash Flow
-5.22M	-429.00M	-81.57M	-74.97M	-114.71M	1.22M
	Investing Cash Flow
-216.95M	0.00	0.00	-132.01M	-157.48M	22.72K
	Financing Cash Flow
266.91M	424.38M	71.33M	117.87M	123.94M	-29.46M

Eagle Point Credit Company Technical Analysis

Technical Analysis Sentiment

Negative

Last Price7.84

Price Trends

50DMA

7.66

Positive

100DMA

7.95

Negative

200DMA

8.22

Negative

Market Momentum

MACD

0.08

Negative

RSI

51.19

Neutral

STOCH

21.91

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ECC, the sentiment is Negative. The current price of 7.84 is above the 20-day moving average (MA) of 7.66, above the 50-day MA of 7.66, and below the 200-day MA of 8.22, indicating a neutral trend. The MACD of 0.08 indicates Negative momentum. The RSI at 51.19 is Neutral, neither overbought nor oversold. The STOCH value of 21.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ECC.

Eagle Point Credit Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VINP	76 Outperform	$645.59M	25.37	7.57%	<0.01%	―	―
LIEN	75 Outperform	$227.75M	10.73	8.67%	11.82%	―	―
ECC	67 Neutral		9.12	8.94%	21.43%	22.24%	-50.71%
Sector *	64 Neutral	$12.74B	9.85	7.88%	17015.07%	12.17%	-6.02%
NEWT	60 Neutral	$304.78M	6.06	18.18%	6.57%	21.99%	23.40%
GECC	48 Neutral	$122.49M	25.70	3.56%	13.45%	32.38%	-90.38%
SSSS	45 Neutral	$131.42M	―	-9.96%	―	90.08%	-893.47%

* Financial Sector Average

Performance Comparison

ECC

Eagle Point Credit Company

7.72

-0.66

-7.88%

NEWT

Newtek Business

11.19

-1.85

-14.19%

SSSS

SuRo Capital

5.87

1.71

41.11%

GECC

Great Elm Capital

10.53

1.57

17.52%

VINP

Vinci Partners Investments

9.95

-0.12

-1.19%

LIEN

Chicago Atlantic BDC

9.73

-0.69

-6.62%

Eagle Point Credit Company Earnings Call Summary

Earnings Call Date:Feb 20, 2025

(Q4-2024)

% Change Since: -4.51%|

Next Earnings Date:May 27, 2025

Earnings Call Sentiment Positive

The earnings call presented several positive aspects including a notable increase in total return for common stockholders and a successful capital deployment strategy. However, the call also highlighted some challenges such as realized losses and increased leverage. Despite these challenges, the positive aspects were more emphasized.

Q4-2024 Updates

Positive Updates

Total Return for Common Stockholders

For the year, holders of common stock had a total return of 14.7%, assuming reinvestment of their distribution.

Increase in Recurring Cash Flows

Recurring cash flows from the portfolio were $82 million, or $0.74 per share, exceeding quarterly aggregate common distributions and total expenses, up from $68.2 million, or $0.66 per share in the previous quarter.

Successful Capital Deployment

Over $223 million in net capital was deployed into new investments during the fourth quarter, with new CLO equity purchased having a weighted average effective yield of 17.8%.

Record CLO Issuance

A record $202 billion of new CLO issuance for the full year, exceeding the previous record of $187 billion set in 2021.

Negative Updates

Realized Losses

The company generated net investment income, less realized losses of $0.12 per share, impacted by a $0.14 per share reclassification of unrealized losses related to 8 older CLO equity positions.

Increased Leverage

The company's debt and preferred securities outstanding at quarter-end totaled approximately 38% of the company's total assets, slightly above the target range.

Company Guidance

During the fourth quarter of 2024, Eagle Point Credit Company Inc. reported a solid performance with a total return of 14.7% for common stockholders, assuming reinvestment of distributions. The company achieved a GAAP return on equity of 10.1% and distributed $1.92 per common share over the year. Recurring cash flows from the portfolio reached $82 million, or $0.74 per share, surpassing the quarterly aggregate common distributions and total expenses. Net investment income, less realized losses, amounted to $0.12 per share, with $0.24 of net investment income per share offset by $0.12 of realized losses. Additionally, the company completed 16 resets, lengthening the portfolio's weighted average remaining reinvestment period to 3.4 years, which is over 50% above the market average. The company deployed over $223 million in net capital into new investments, with new CLO equity purchases having a weighted average effective yield of 17.8%. Eagle Point also issued $111 million in net proceeds from its largest-ever notes offering and raised the target leverage ratio to 27.5% to 37.5%. The company's asset coverage ratios for preferred stock and debt stood at 263% and 506%, respectively, comfortably above statutory requirements.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.