Prospect Capital (PSEC)
NASDAQ:PSEC
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Prospect Capital
(NASDAQ:PSEC)
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Rating:52Neutral
Price Target:
$2.00
â–¼(-24.81% Downside)
Action:Reiterated
Date:05/09/26
The score is held back primarily by weak and inconsistent profitability and a technically weak price trend (below key moving averages). Positives include a moderately solid balance sheet with improved leverage, better recent cash flow, and constructive earnings-call signals around portfolio de-risking and liquidity; the very high dividend yield supports valuation but is tempered by limited earnings-based valuation visibility and ongoing NAV pressure.
Positive Factors
Shift to First‑Lien Senior Secured Loans
A material rotation into first‑lien senior secured middle‑market loans meaningfully lowers portfolio credit risk and increases recovery prospects in defaults. This structural shift should sustain lower loss severity and steadier interest income over the next several quarters.
Negative Factors
Volatile Profitability and NAV Pressure
Intermittent profitable years followed by sizable losses and a declining NAV undermine sustainable distributable earnings. Persistent negative returns and margin volatility constrain retained earnings and long‑term capital formation, limiting recovery prospects without durable earnings improvement.
Read all positive and negative factors
Positive Factors
Negative Factors
Shift to First‑Lien Senior Secured Loans
A material rotation into first‑lien senior secured middle‑market loans meaningfully lowers portfolio credit risk and increases recovery prospects in defaults. This structural shift should sustain lower loss severity and steadier interest income over the next several quarters.
Read all positive factors
Prospect Capital (PSEC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.14B
Dividend Yield22.04%
Average Volume (3M)6.15M
Price to Earnings (P/E)5.6
Beta (1Y)0.54
Revenue Growth-71.18%
EPS Growth59.28%
CountryUS
Employees130
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)-0.24
Shares Outstanding501,007,660
10 Day Avg. Volume6,914,811
30 Day Avg. Volume6,152,232
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.47
Price to Sales (P/S)-5.06
P/FCF Ratio2.68
Enterprise Value/Market Cap2.49
Enterprise Value/Revenue28.58
Enterprise Value/Gross Profit-122.73
Enterprise Value/Ebitda-456.91
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.46
Revenue Forecast (FY)$633.49M
Prospect Capital Business Overview & Revenue Model
Company Description
Prospect Capital Corporation is a business development company. It specializes in middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, ...
How the Company Makes Money
Prospect Capital primarily makes money by earning investment income on its portfolio, which consists largely of loans and other credit instruments issued by middle-market businesses. The key revenue stream is interest income generated from these d...
Prospect Capital Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Sep 01, 2026
Earnings Call Sentiment Positive
The call emphasized successful execution of a strategic rotation toward lower-risk, first-lien middle market lending (notable basis-point improvements), strong liquidity (large unencumbered asset base and revolver commitments), low non-accruals, and durable historical investment IRRs, while also reporting a quarter of net repayments exceeding originations, a material remaining real estate allocation (14%), and a high proportion of unsecured debt in the capital structure. Overall, the narrative is one of risk reduction, balance-sheet strengthening, and portfolio reallocation, tempered by slower net deployment in the quarter and some disclosure ambiguity on distributions.Positive Updates
Net Investment Income and NAV
Net investment income (NII) of $78 million for the March quarter, or $0.16 per common share; NAV of approximately $3.0 billion, or $6.05 per common share as of March 31, 2026.
Negative Updates
Net Repayments Exceed Originations in Quarter
Investment originations totaled $115 million in the quarter while repayments and exits were $222 million, resulting in net repayments of $107 million — indicating a quarter of net portfolio runoff rather than net deployment.
Read all updates
Q3-2026 Updates
Positive
Negative
Net Investment Income and NAV
Net investment income (NII) of $78 million for the March quarter, or $0.16 per common share; NAV of approximately $3.0 billion, or $6.05 per common share as of March 31, 2026.
Read all positive updates
Company Guidance
Management guided that they will pay monthly common distributions of $35 per share for May–August and that preferred distributions continue at contract rates; for the March quarter net investment income was $78 million ($0.16 per common share), NAV was about $3.0 billion ($6.05 per share), net debt to total assets was 27%, and unsecured debt plus unsecured perpetual preferred represented 88% of total debt and preferred. They reiterated a portfolio rotation into first‑lien senior secured middle‑market loans (first‑lien mix up 790 bps to 72% since June 2024; second‑lien down 404 bps to 12.4%; subordinated structured notes down 837 bps to ~0%), with middle‑market lending at 85% of investments at cost (up 875 bps) and comprising 94% of $115 million of originations in the quarter; repayments and exits totaled $222 million, resulting in net repayments of $107 million. Key credit and liquidity metrics cited include 89 portfolio companies across 31 industries with aggregate fair value $6.3 billion, 84% of the portfolio at cost in senior/secured debt, NPRC real estate at 14% of investments at cost (53 properties, March quarter yield 5.2%, $229 million unrealized gain), interest income 92% of total investment income (PIK down 41% year‑over‑year and 11% of total investment income for the quarter), non‑accruals ~0.7% of total assets, combined cash and undrawn revolver of $1.8 billion, $4.2 billion unencumbered assets (~65% of portfolio), $2.12 billion of bank commitments from 48 banks, revolver drawn pricing at SOFR+2.05%, weighted‑average unsecured debt cost 4.71%, and a liability ladder including $168 million of 5.5% senior unsecured notes due 2030; they expect to redeploy future real estate exit proceeds primarily into first‑lien senior secured loans and to use their floating‑rate revolver to match floating‑rate assets.Prospect Capital Financial Statement Overview
Summary
Income Statement
28
Negative
Balance Sheet
62
Positive
Cash Flow
55
Neutral
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 99.36M | -276.83M | 467.36M | 87.30M | 739.88M | 1.15B |
| Gross Profit | -23.14M | -406.94M | 320.91M | -60.90M | 622.47M | 1.02B |
| EBITDA | -6.21M | -469.92M | 262.83M | -101.64M | 582.58M | 963.81M |
| Net Income | -37.75M | -469.92M | 262.83M | -101.64M | 582.58M | 963.81M |
Balance Sheet | ||||||
| Total Assets | 6.38B | 6.80B | 7.86B | 7.86B | 7.66B | 6.30B |
| Cash, Cash Equivalents and Short-Term Investments | 34.59M | 46.51M | 81.90M | 90.57M | 31.17M | 63.61M |
| Total Debt | 1.73B | 2.09B | 2.43B | 2.58B | 2.74B | 2.23B |
| Total Liabilities | 1.82B | 3.82B | 4.15B | 4.13B | 3.54B | 2.36B |
| Stockholders Equity | 4.57B | 2.99B | 3.71B | 3.73B | 4.12B | 3.95B |
Cash Flow | ||||||
| Free Cash Flow | 412.66M | 523.17M | 279.98M | -220.85M | -795.34M | 31.02M |
| Operating Cash Flow | 412.66M | 523.17M | 279.98M | -220.85M | -795.34M | 31.02M |
| Investing Cash Flow | 139.96M | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | -572.62M | -558.25M | -289.76M | 281.13M | 767.09M | -11.97M |
Prospect Capital Technical Analysis
Negative
2.66
Price Trends
2.54
Negative
2.59
Negative
2.51
Negative
Market Momentum
-0.12
Positive
37.62
Neutral
38.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSEC, the sentiment is Negative. The current price of 2.66 is above the 20-day moving average (MA) of 2.48, above the 50-day MA of 2.54, and above the 200-day MA of 2.51, indicating a bearish trend. The MACD of -0.12 indicates Positive momentum. The RSI at 37.62 is Neutral, neither overbought nor oversold. The STOCH value of 38.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PSEC.
Prospect Capital Risk Analysis
Prospect Capital disclosed 4 risk factors in its most recent earnings report. Prospect Capital reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
Prospect Capital Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $4.62B | 24.50 | 14.32% | 7.17% | 16.23% | -19.30% | |
69 Neutral | $13.35B | 35.16 | 8.11% | 9.64% | 14.51% | -20.45% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
59 Neutral | $749.95M | -3.83 | -4.83% | 14.17% | -24.31% | -157.16% | |
54 Neutral | $312.96M | -4.67 | -19.08% | 21.13% | -153.69% | -168.78% | |
52 Neutral | $1.14B | 5.58 | -1.12% | 22.04% | -71.18% | 59.28% | |
50 Neutral | $248.13M | -30.83 | 0.01% | 16.61% | 122.81% | 43.00% |
* Financial Sector Average
PSEC
Prospect Capital
2.28
-0.48
-17.36%
MAIN
Main Street Capital
49.63
-2.06
-3.98%
NMFC
New Mountain Finance
7.94
-1.28
-13.88%
PNNT
Pennantpark Investment
3.80
-1.78
-31.90%
ARCC
Ares Capital
18.59
-1.07
-5.43%
TCPC
BlackRock TCP Capital
3.73
-2.74
-42.38%
Prospect Capital Corporate Events
Business Operations and StrategyPrivate Placements and FinancingRegulatory Filings and Compliance
Prospect Capital Launches New Preferred Equity Distribution Program
Neutral
May 8, 2026
On May 8, 2026, Prospect Capital Corporation entered into an equity distribution agreement with Prospect Capital Management, Prospect Administration and A.G.P. / Alliance Global Partners, allowing the company to issue and sell up to $400 million i...
DividendsFinancial Disclosures
Prospect Capital Reports Quarterly Results and Declares Distributions
Positive
May 8, 2026
On May 7, 2026, Prospect Capital Corporation reported results for the quarter ended March 31, 2026, posting net investment income of $78.5 million, or $0.16 per common share, and net income of $26.4 million, or $0.05 per share. Net asset value to ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.