Prospect Capital (PSEC)
NASDAQ:PSEC
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Prospect Capital
(NASDAQ:PSEC)
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Rating:54Neutral
Price Target:
$2.50
▼(-6.02% Downside)
Action:ReiteratedDate: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 (first‑lien)
A deliberate rotation to first‑lien senior secured loans increases structural credit protection and recovery prospects across economic cycles. With 71.4% first‑lien exposure, interest cash flows are more senior and predictable, lowering loss severity and supporting durable income generation.
Negative Factors
Volatile profitability and revenue
Repeated swings between meaningful profits and sizable losses and a sharp TTM revenue decline impair earnings visibility. This volatility undermines confidence in sustainable distributable earnings, complicates capital allocation, and increases the chance distributions or reinvestment plans face pressure.
Read all positive and negative factors
Positive Factors
Negative Factors
Higher-quality loan mix (first‑lien)
A deliberate rotation to first‑lien senior secured loans increases structural credit protection and recovery prospects across economic cycles. With 71.4% first‑lien exposure, interest cash flows are more senior and predictable, lowering loss severity and supporting durable income generation.
Read all positive factors
Prospect Capital (PSEC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
N/A
Dividend Yield22.04%
Average Volume (3M)3.99M
Price to Earnings (P/E)12.9
Beta (1Y)0.51
Revenue Growth-49.05%
EPS Growth-231.10%
CountryUS
Employees130
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.19
Shares Outstanding486,484,950
10 Day Avg. Volume3,615,497
30 Day Avg. Volume3,991,374
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 Cap10.00T>
Enterprise Value/Revenue-48.03
Enterprise Value/Gross Profit-16.82
Enterprise Value/Ebitda-13.19
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.42
Revenue Forecast (FY)$655.52M
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:Feb 09, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Positive
The call conveyed a broadly positive tone: management highlighted meaningful portfolio improvement and de-risking (large increase in first-lien exposure, sharp reductions in second-lien and subordinated structured notes), strong liquidity and funding diversity, disciplined origination focused on middle market lending, low nonaccruals and strong historical IRRs. The primary negatives are modest originations in the quarter (net repayments of $1M), remaining PIK exposure (albeit substantially reduced), reliance on unsecured funding instruments (though diversified), and the operational/timing aspects of rotating real estate exits. Overall, the positives around credit quality, liquidity and strategic rotation materially outweigh the limited near-term headwinds.Positive Updates
Net Investment Income and NAV
Net investment income for the December quarter was $91 million, or $0.19 per common share. Net asset value (NAV) was approximately $3.0 billion, or $6.21 per common share as of December 31, 2025.
Negative Updates
Modest Quarterly New Origination Volume
Investment originations were relatively small at $80 million in the December quarter and effectively offset by $79 million of repayments and exits, resulting in net repayments of $1 million — indicating limited net deployment in the period.
Read all updates
Q2-2026 Updates
Positive
Negative
Net Investment Income and NAV
Net investment income for the December quarter was $91 million, or $0.19 per common share. Net asset value (NAV) was approximately $3.0 billion, or $6.21 per common share as of December 31, 2025.
Read all positive updates
Company Guidance
On the call management reiterated its strategic guidance to pivot further into first‑lien senior secured middle‑market lending and preserve capital while returning cash to shareholders: monthly common distributions of $0.045 for Feb–Apr were announced (total distributions since IPO $4.7B or $21.93/share), net investment income for the December quarter was $91M ($0.19/share) with NAV ≈ $3.0B ($6.21/share), net debt/total assets 28.2%, unsecured debt + unsecured perpetual preferred = 85.3% of total debt + preferred, weighted average cost of unsecured debt 4.68% and a $168M institutional 5.5% note issued (due 12/31/2030); balance sheet and liquidity included combined cash + undrawn revolver $1.6B, $4.2B unencumbered assets (≈64% of portfolio), $2.12B in bank commitments from 48 banks, revolver drawn pricing SOFR+2.05% and revolver maturity/revolve dates to June 2029/June 2028, unfunded commitments $34M ($23M at company discretion ≈0.5%/0.3% of assets); portfolio metrics highlighted first‑lien mix up 728 bps to 71.4% since June 2024 while second‑lien fell 371 bps to 12.7% and subordinated structured notes fell 818 bps to near 0, middle‑market lending = 85% of investments at cost (up 878 bps since June 2024) with quarter originations $80M (100% middle market, majority first‑lien), $79M repayments/exits (net repayments $1M), NPRC real estate = 14% at cost with 54 properties remaining, NPRC income yield 5.4% (Dec quarter) and $270M unrealized gain, interest income = 92% of investment income (12 months ended Dec 2025), PIK interest down 46% YoY and PIK = 8.6% of investment income for the quarter, nonaccruals ≈0.7% of assets, and long‑term performance/history including ~ $13.1B invested in ~350 exited investments with a 12% unlevered gross cash IRR, middle‑market exited IRR ≈14.5% (on ~$11.2B invested) and core < $50M EBITDA exited IRR ≈17.2% (on ~$6.3B invested) with EBITDA/interest coverage ~210% (230% for core).Prospect Capital Financial Statement Overview
Summary
Income Statement
22
Negative
Balance Sheet
60
Neutral
Cash Flow
67
Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | -64.29M | -276.83M | 467.36M | 87.30M | 739.88M | 1.15B |
| Gross Profit | -183.55M | -406.94M | 320.91M | -60.90M | 622.47M | 1.02B |
| EBITDA | -234.15M | -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 | 34.50M | 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 | 3.58B | 3.82B | 4.15B | 4.13B | 3.54B | 2.36B |
| Stockholders Equity | 2.96B | 2.99B | 3.71B | 3.73B | 4.12B | 3.95B |
Cash Flow | ||||||
| Free Cash Flow | 435.54M | 523.17M | 279.98M | -220.85M | -795.34M | 31.02M |
| Operating Cash Flow | 435.54M | 523.17M | 279.98M | -220.85M | -795.34M | 31.02M |
| Investing Cash Flow | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | -457.38M | -558.25M | -289.76M | 281.13M | 767.09M | -11.97M |
Prospect Capital Technical Analysis
Positive
2.66
Price Trends
2.64
Negative
2.58
Positive
2.58
Positive
Market Momentum
>-0.01
Negative
52.33
Neutral
77.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSEC, the sentiment is Positive. The current price of 2.66 is above the 20-day moving average (MA) of 2.55, above the 50-day MA of 2.64, and above the 200-day MA of 2.58, indicating a neutral trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 52.33 is Neutral, neither overbought nor oversold. The STOCH value of 77.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
65 Neutral | $4.78B | 10.94 | 16.94% | 7.17% | 11.60% | 9.38% | |
63 Neutral | $12.99B | 10.89 | 9.22% | 9.64% | 10.34% | -24.16% | |
61 Neutral | $805.44M | 59.29 | 1.29% | 14.17% | 36.15% | -38.59% | |
58 Neutral | $291.22M | 10.64 | 5.42% | 16.61% | -3.09% | 200.66% | |
54 Neutral | ― | 12.89 | -7.68% | 22.04% | -49.05% | -231.10% | |
53 Neutral | $323.83M | -5.23 | -12.44% | 21.13% | -91.81% | 78.46% |
* Financial Sector Average
PSEC
Prospect Capital
2.62
-0.34
-11.64%
MAIN
Main Street Capital
53.08
3.66
7.41%
NMFC
New Mountain Finance
7.99
-0.13
-1.65%
PNNT
Pennantpark Investment
4.46
-0.91
-16.88%
ARCC
Ares Capital
18.09
-0.14
-0.76%
TCPC
BlackRock TCP Capital
3.84
-1.67
-30.36%
Prospect Capital Corporate Events
Business Operations and StrategyPrivate Placements and FinancingRegulatory Filings and Compliance
Prospect Capital Expands Preferred Stock Offering and Capacity
Positive
Feb 11, 2026
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 a...
DividendsFinancial Disclosures
Prospect Capital Reports Quarterly Results, Declares 2026 Distributions
Positive
Feb 9, 2026
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 valu...
Executive/Board ChangesShareholder Meetings
Prospect Capital Shareholders Reelect Class III Directors
Neutral
Jan 15, 2026
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, 2...
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.