Prospect Capital (PSEC) AI Stock Analysis

• Market Cap: $1.60B
• Dividend Yield: 20.18%
• Average Volume (3M): 4.05M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.65
• Revenue Growth: -54.81%
• EPS Growth: -472.20%
• Country: US
• Employees: N/A
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.17
• Shares Outstanding: 462,343,440
• 10 Day Avg. Volume: 4,428,133
• 30 Day Avg. Volume: 4,047,016
• PEG Ratio: <0.01
• Price to Book (P/B): 0.30
• Price to Sales (P/S): 6.97
• P/FCF Ratio: 2.68
• Enterprise Value/Market Cap: 2.33
• Enterprise Value/Revenue: 25.28
• Enterprise Value/Gross Profit: 7.46
• Enterprise Value/Ebitda: -8.60
• 1Y Price Target: $2.50
• Price Target Upside: -10.07% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 1

• Rating: 54 Neutral
• Price Target: $3.00 ▲(7.91% Upside)

The overall stock score is primarily influenced by the financial performance challenges, including declining revenue and profitability. The earnings call provided some positive insights, particularly in net investment income and portfolio repositioning, which helped offset some of the negative aspects. The high dividend yield is a positive factor for valuation, but the negative P/E ratio remains a concern. Technical analysis indicates bearish momentum, further impacting the score.

Positive Factors

Strong Profitability

High profit margins indicate effective cost management and strong pricing power, supporting long-term profitability and competitive positioning.

Robust Cash Flow

Strong cash flow generation enhances liquidity, enabling the company to reinvest in growth opportunities and maintain shareholder distributions.

Diversified Funding

A diversified funding base provides financial flexibility and resilience, supporting the company's ability to navigate economic fluctuations.

Negative Factors

Historical Revenue Volatility

Inconsistent revenue growth can hinder long-term planning and investment, posing challenges to sustaining growth momentum and market confidence.

Low Return on Equity

Low ROE suggests inefficiencies in utilizing equity, potentially limiting the company's ability to generate shareholder value and attract investment.

Net Repayments Exceed Originations

Higher capital outflows than inflows from new investments can constrain growth, impacting the company's ability to expand its investment portfolio.

Prospect Capital Business Overview & Revenue Model

Company Description

Prospect Capital Corporation (PSEC) is a publicly traded investment firm specializing in private equity and debt investments. The company primarily focuses on investing in middle-market companies across various sectors, including healthcare, manufacturing, and business services. Prospect Capital seeks to generate income through its investments by providing debt and equity financing, thereby supporting the growth of its portfolio companies while delivering attractive returns to its shareholders.

How the Company Makes Money

Prospect Capital generates revenue primarily through interest income and fees associated with its investments in debt and equity securities. The company invests in a diversified portfolio of private companies, providing them with loans or equity capital, which yields interest and potential capital gains. Key revenue streams include interest payments from the loans made to portfolio companies, management fees from the assets under management, and potential exit fees when investments are sold or exited. Additionally, Prospect Capital may benefit from significant partnerships with financial institutions and other entities that enhance its investment capabilities and broaden its network in sourcing quality investment opportunities.

Prospect Capital Financial Statement Overview

Summary

Prospect Capital faces significant challenges in revenue and profitability, with a drastic decline in revenue and a negative net profit margin. The balance sheet shows moderate leverage, but inefficiencies in generating returns are evident. Cash flow stability is a positive aspect, though growth remains a concern.

Income Statement

Prospect Capital's income statement shows significant volatility. The company experienced a drastic decline in revenue and profitability in the most recent year, with a revenue growth rate of -66.27% and a net profit margin of -234.08%. This indicates substantial challenges in maintaining revenue and controlling costs. Historically, the company had periods of strong profitability, but recent performance raises concerns about its ability to sustain growth and profitability.

Balance Sheet

The balance sheet reflects moderate leverage with a debt-to-equity ratio of 0.45, which is manageable. However, the return on equity is negative at -10.17%, indicating inefficiencies in generating returns for shareholders. The equity ratio is relatively stable, suggesting a balanced asset structure, but the negative ROE highlights potential issues in asset utilization and profitability.

Cash Flow

Cash flow analysis shows a mixed picture. The operating cash flow to net income ratio is strong at 3.86, indicating good cash generation relative to net income. However, free cash flow growth has been negative, reflecting challenges in maintaining cash flow growth. The company has managed to maintain a positive free cash flow to net income ratio, which is a positive sign of cash flow stability despite recent declines.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	147.12M	200.75M	444.22M	811.17M	697.72M	639.50M
Gross Profit	498.52M	14.23M	861.66M	568.65M	477.86M	631.97M
EBITDA	-432.18M	-322.62M	0.00	-101.64M	710.16M	1.12B
Net Income	0.00	-469.92M	262.83M	-101.64M	582.58M	963.81M
Balance Sheet
Total Assets	6.80B	6.80B	7.86B	7.86B	7.66B	6.30B
Cash, Cash Equivalents and Short-Term Investments	50.79M	50.79M	85.87M	90.57M	31.17M	63.61M
Total Debt	2.09B	2.09B	2.43B	2.58B	2.74B	2.23B
Total Liabilities	2.19B	2.19B	2.56B	2.71B	3.54B	2.36B
Stockholders Equity	4.62B	4.62B	5.30B	5.15B	4.12B	3.95B
Cash Flow
Free Cash Flow	959.16M	523.17M	279.98M	-220.85M	-795.34M	31.02M
Operating Cash Flow	959.16M	523.17M	279.98M	-220.85M	-795.34M	31.02M
Investing Cash Flow	11.54M	266.59M	-2.12M	-505.51M	-1.11B	-154.81M
Financing Cash Flow	-558.25M	-558.25M	-289.76M	281.13M	767.09M	-11.97M

Prospect Capital Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 2.78
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSEC, the sentiment is Neutral. The current price of 2.78 is above the 20-day moving average (MA) of 2.69, above the 50-day MA of 2.77, and below the 200-day MA of 3.33, indicating a neutral trend. The MACD of -0.01 indicates Negative momentum. The RSI at 51.54 is Neutral, neither overbought nor oversold. The STOCH value of 79.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PSEC.

Prospect Capital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCC	75 Outperform	$14.19B	9.87	10.25%	9.67%	7.71%	-29.47%
MAIN	74 Outperform	$5.63B	10.37	19.65%	6.21%	28.32%	13.63%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
NMFC	65 Neutral	$994.48M	12.34	6.18%	13.80%	39.05%	-32.62%
TCPC	58 Neutral	$502.57M	―	-1.48%	22.17%	-48.53%	73.29%
PSEC	54 Neutral	$1.60B	―	-9.48%	20.18%	-54.81%	-472.20%
PNNT	48 Neutral	$429.65M	30.42	2.89%	14.59%	-35.46%	-67.15%

Prospect Capital Corporate Events

Prospect Capital Announces Dividends Amid Portfolio Optimization

On August 26, 2025, Prospect Capital announced the declaration of monthly and quarterly dividends for various classes of its preferred stock and common shareholders, reflecting its ongoing commitment to shareholder returns. The company reported financial results for the fiscal year ended June 30, 2025, highlighting a net investment income of $79 million, but also a net loss applicable to common shareholders of $226 million. Prospect Capital has been actively optimizing its portfolio by increasing its focus on first lien senior secured loans and exiting non-core investments, which has resulted in a significant reduction of its subordinated structured notes portfolio.

Prospect Capital Approves Stock Sale Below Asset Value

On June 17, 2025, Prospect Capital held a virtual Special Meeting of Stockholders where a proposal was approved to allow the company to sell shares of its common stock below the current net asset value per share over the next 12 months. This decision, which was supported by a majority of the voting stockholders, is aimed at providing the company with greater flexibility in its financial operations, potentially impacting its market strategy and shareholder value.