Prospect Capital (PSEC) AI Stock Analysis

• Market Cap: N/A
• Dividend Yield: 22.04%
• Average Volume (3M): 4.08M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.48
• Revenue Growth: -49.05%
• EPS Growth: -231.10%
• Country: US
• Employees: N/A
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.19
• Shares Outstanding: 482,489,800
• 10 Day Avg. Volume: 4,778,540
• 30 Day Avg. Volume: 4,079,597
• PEG Ratio: <0.01
• Price to Book (P/B): 0.30
• Price to Sales (P/S): -5.06
• P/FCF Ratio: 7.83
• Enterprise Value/Market Cap: 10.00T>
• Enterprise Value/Revenue: -36.59
• Enterprise Value/Gross Profit: -13.98
• Enterprise Value/Ebitda: -15.52
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 0.42
• Revenue Forecast (FY): $620.52M

• Rating: 54 Neutral
• Price Target: $2.50 ▼(-6.02% Downside)
• Action: Reiterated Date: 02/12/26
• Date: Action: Reiterated 02/12/26

The score is held back primarily by unstable earnings and a sharp TTM revenue contraction, despite better recent cash generation and a generally moderate-leverage balance sheet. Technicals are also weak with price trading below key moving averages. Offsetting factors include a very high dividend yield and a generally constructive earnings-call outlook focused on de-risking, liquidity strength, and maintaining distributions.

Positive Factors

Higher-quality loan mix

A sustained rotation into first‑lien senior secured loans materially de‑risks the asset base: higher recovery priority and stronger collateral support reduce long‑run loss severity, improving downside protection and steadying interest income that funds distributions.

Robust liquidity and unencumbered assets

Large liquidity cushion and substantial unencumbered assets provide durable funding flexibility and optionality. This supports meeting distributions, execution of originations or opportunistic buys, and reduces near‑term refinancing stress across multiple adverse market scenarios.

Recent positive cash generation

Consistent positive operating and free cash flow in recent periods bolsters internal funding for distributions and reinvestment. While historically volatile, recent cash conversion reduces reliance on external capital and supports durable payout and balance sheet resilience over the medium term.

Negative Factors

Earnings and revenue volatility

Repeated swings between profits and losses and a steep TTM revenue decline impair earnings predictability and make distribution coverage uncertain. Persistent volatility complicates capital planning, weakens investor confidence, and raises the risk of future NAV pressure during credit cycles.

Heavy reliance on unsecured funding

Material dependence on unsecured instruments creates structural refinancing and cost‑of‑funding risk if credit markets tighten. Even with diversification, a large unsecured mix can amplify funding volatility and spread sensitivity, pressuring net yields and leverage management over several quarters.

Residual non‑cash PIK exposure

Although reduced, payment‑in‑kind income remains a meaningful share of investment revenue. PIK reduces actual cash receipts and can reaccelerate under stress, weakening cash coverage of distributions and increasing reinvestment timing risk during adverse credit conditions.

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, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending and bridge transactions. It also makes real estate investments particularly in multi-family residential real estate asset class. The fund makes secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second lien, private debt, private equity, mezzanine debt, and equity investments in private and microcap public businesses. It focuses on both primary origination and secondary loans/portfolios and invests in situations like debt financings for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, real estate financings/investments. It also focuses on investing in small-sized and medium-sized private companies rather than large public companies. The fund typically invests across all industry sectors, with a particular expertise in the energy and industrial sectors. It invests in aerospace and defense, chemicals, conglomerate services, consumer services, ecological, electronics, financial services, machinery, manufacturing, media, pharmaceuticals, retail, software, specialty minerals, textiles and leather, transportation, oil and gas production, coal production, materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, business services, and other select sectors. It prefers to invest in the United States and Canada. The fund seeks to invest between $10 million to $500 million per transaction in companies with EBITDA between $5 million and $150 million, sales value between $25 million and $500 million, and enterprise value between $5 million and $1000 million. It fund also co-invests for larger deals. The fund seeks control acquisitions by providing multiple levels of the capital structure. The fund focuses on sole, agented, club, or syndicated deals.

How the Company Makes Money

Prospect Capital generates revenue through a combination of interest income, fees, and capital gains from its investments. The primary revenue stream comes from the interest earned on the debt securities it provides to portfolio companies, which typically have higher yields compared to traditional fixed-income investments. Additionally, Prospect Capital may earn fees from structuring deals and managing its investments, which can include transaction fees, monitoring fees, and exit fees when investments are sold. The company also benefits from capital gains when it realizes profits from its equity investments in the companies it finances. Strategic partnerships with other financial institutions and investment firms can enhance its deal flow and provide additional investment opportunities, further contributing to its overall earnings.

Prospect Capital Financial Statement Overview

Summary

Fundamentals are mixed. The income statement is the main drag due to highly unstable profitability (repeated swings between profits and losses) and a steep TTM revenue decline, while the balance sheet appears moderately levered with a sizable equity base but inconsistent/negative ROE recently. Cash flow is a relative positive with recent operating and free cash flow staying positive (including TTM growth), though it has been volatile historically.

Income Statement

Profitability and growth have been highly unstable. After strong profitability in FY2021–FY2022, results flipped to losses in FY2023, recovered to meaningful profits in FY2024, and then reverted to sizable losses again in FY2025 (annual) and TTM (Trailing-Twelve-Months). Revenue is also extremely volatile, including a sharp contraction in TTM, which reduces confidence in earnings quality and forward visibility. The key strength is the ability to generate strong profits in certain periods, but the repeated swing back to losses is the dominant concern.

Balance Sheet

Leverage looks moderate in the annual periods, with debt-to-equity generally in a mid-range band and a sizeable equity base relative to assets. However, returns on equity have been inconsistent and are negative in the most recent periods (annual FY2025 and TTM), signaling weaker value creation despite the capital base. A notable positive is that TTM shows no debt reported, but the sharp mismatch versus prior years introduces some interpretability risk.

Cash Flow

Cash generation is a relative bright spot recently: operating cash flow and free cash flow are positive in FY2023–FY2025 (annual) and TTM (Trailing-Twelve-Months), with strong growth shown in TTM. Cash flow has also covered net losses/profits in the provided data (free cash flow tracks net income closely), supporting liquidity. The main weakness is a history of volatility, highlighted by very large negative operating/free cash flow in FY2022, which underscores that cash performance can swing meaningfully year to year.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	-86.63M	-276.83M	467.36M	87.30M	739.88M	1.15B
Gross Profit	-226.81M	-406.94M	320.91M	-60.90M	622.47M	1.02B
EBITDA	-204.25M	-469.92M	262.83M	-101.64M	582.58M	963.81M
Net Income	-234.15M	-469.92M	262.83M	-101.64M	582.58M	963.81M
Balance Sheet
Total Assets	6.53B	6.80B	7.86B	7.86B	7.66B	6.30B
Cash, Cash Equivalents and Short-Term Investments	38.06M	46.51M	81.90M	90.57M	31.17M	63.61M
Total Debt	1.85B	2.09B	2.43B	2.58B	2.74B	2.23B
Total Liabilities	1.95B	3.82B	4.15B	4.13B	3.54B	2.36B
Stockholders Equity	4.58B	4.62B	5.30B	5.15B	4.12B	3.95B
Cash Flow
Free Cash Flow	250.23M	178.92M	282.10M	284.66M	-795.34M	31.02M
Operating Cash Flow	250.23M	178.92M	282.10M	284.66M	-795.34M	31.02M
Investing Cash Flow	190.85M	344.25M	-2.12M	-505.51M	-1.11B	-154.81M
Financing Cash Flow	-457.38M	-558.25M	-289.76M	281.13M	767.09M	-11.97M

Prospect Capital Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 2.66
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 2.66 is below the 20-day moving average (MA) of 2.82, below the 50-day MA of 2.69, and below the 200-day MA of 2.72, indicating a bullish trend. The MACD of 0.07 indicates Negative momentum. The RSI at 50.84 is Neutral, neither overbought nor oversold. The STOCH value of 61.49 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
MAIN	77 Outperform	$5.38B	9.95	19.07%	7.17%	11.60%	9.38%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
NMFC	67 Neutral	$854.13M	12.69	5.43%	14.17%	36.15%	-38.59%
ARCC	62 Neutral	$13.94B	10.44	9.39%	9.64%	10.34%	-24.16%
PNNT	59 Neutral	$336.27M	13.14	5.38%	16.61%	-3.09%	200.66%
PSEC	54 Neutral	―	-3.56	-4.85%	22.04%	-49.05%	-231.10%
TCPC	50 Neutral	$406.39M	-44.24	-1.15%	21.13%	-91.81%	78.46%

Prospect Capital Corporate Events

Prospect Capital Expands Preferred Stock Offering and Capacity

On February 10, 2026, Prospect Capital Corporation amended its dealer manager agreement with Preferred Capital Securities, LLC to expand its preferred stock offering, increasing the aggregate liquidation preference capacity from $2.25 billion to approximately $2.65 billion and permitting up to 105,858,302 shares across all preferred series. As part of the change, the company discontinued several earlier preferred series but continues to offer its 7.50% Series A5 and 7.50% Series M5 preferred stock under an existing SEC shelf registration, signaling an effort to optimize its capital-raising mix while refining the structure of its preferred equity program for investors.

The most recent analyst rating on (PSEC) stock is a Hold with a $2.50 price target. To see the full list of analyst forecasts on Prospect Capital stock, see the PSEC Stock Forecast page.

Prospect Capital Reports Quarterly Results, Declares 2026 Distributions

On February 9, 2026, Prospect Capital reported financial results for the quarter ended December 31, 2025, posting net investment income of $90.9 million, or $0.19 per common share, while recording a small net loss of $6.6 million as net asset value per share declined to $6.21 from $6.45. The company highlighted stable leverage and strong interest coverage, alongside a long-term middle-market lending track record with exited investments delivering gross IRRs of about 14.5% overall and 17.2% in core smaller-company lending, with minimal realized loss rates.

The board also declared monthly cash distributions to common shareholders of $0.045 per share for February, March, and April 2026, extending a record that has seen approximately $4.7 billion, or $21.93 per share, paid or declared since inception. In addition, Prospect announced monthly and quarterly dividends through mid-2026 across its various preferred stock series, reinforcing its income-focused capital return strategy for both common and preferred investors.

The most recent analyst rating on (PSEC) stock is a Hold with a $3.00 price target. To see the full list of analyst forecasts on Prospect Capital stock, see the PSEC Stock Forecast page.

Prospect Capital Shareholders Reelect Class III Directors

On January 15, 2026, Prospect Capital Corporation held its Annual Meeting of Stockholders virtually, with common and preferred shareholders voting on the election of Class III directors based on the capital structure in place as of September 17, 2025, which included 465,087,009 common shares and numerous series of preferred stock. At the meeting, stockholders elected John F. Barry III and Eugene S. Stark as Class III directors to serve until the 2028 annual meeting or until successors are chosen, reinforcing continuity in the company’s board leadership and governance framework for the coming years.

The most recent analyst rating on (PSEC) stock is a Hold with a $3.00 price target. To see the full list of analyst forecasts on Prospect Capital stock, see the PSEC Stock Forecast page.