Want to see PSEC full AI Analyst Report?
Top Page
Prospect Capital
(NASDAQ:PSEC)
Select Model
Select Model
Rating:62Neutral
Price Target:
$2.00
▼(-14.89% Downside)
Action:Reiterated
Date:08/21/26
The score is held back primarily by volatile financial performance (inconsistent profitability and revenue variability), partially offset by improved recent cash flow and a reasonably supported balance sheet. Valuation is a clear positive due to the low P/E and very high dividend yield, while technicals are mildly supportive but not strong on longer-term trend. The latest earnings call adds support through strong liquidity/credit metrics and a successful portfolio exit, tempered by flat NII and concentration/funding mix risks.
Positive Factors
Strong Credit Performance
Lower portfolio leverage, stronger interest coverage, and a low realized loss rate indicate disciplined underwriting and resilient borrower performance. These credit metrics can support steadier investment income, reduce impairment risk, and strengthen the durability of returns through normal middle-market cycles.
Negative Factors
Volatile Financial Performance
Sharp revenue swings and recurring loss years reduce confidence that reported earnings are stable or readily repeatable. For an investment company, inconsistent results can reflect changing portfolio marks and credit outcomes, making future income and capital generation less predictable across cycles.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong Credit Performance
Lower portfolio leverage, stronger interest coverage, and a low realized loss rate indicate disciplined underwriting and resilient borrower performance. These credit metrics can support steadier investment income, reduce impairment risk, and strengthen the durability of returns through normal middle-market cycles.
Read all positive factors
Prospect Capital (PSEC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.09B
Dividend Yield24.5%
Average Volume (3M)4.36M
Price to Earnings (P/E)35.6
Beta (1Y)0.57
Revenue Growth106.57%
EPS GrowthN/A
CountryUS
Employees130
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.06
Shares Outstanding533,816,830
10 Day Avg. Volume5,832,137
30 Day Avg. Volume4,359,295
Financial Highlights & Ratios
PEG Ratio-0.37
Price to Book (P/B)0.25
Price to Sales (P/S)1.73
P/FCF Ratio2.15
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$2.00Price Target Upside-14.89% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering1
EPS Forecast (FY)0.38
Revenue Forecast (FY)$579.81M
Prospect Capital Business Overview & Revenue Model
Company Description
Prospect Capital Corporation operates as a Business Development Company (BDC), providing diverse financing solutions predominantly to the middle market. The firm engages in a broad spectrum of investment activities, including growth capital, lever...
How the Company Makes Money
PSEC makes money primarily from investment income generated by its portfolio of loans and other investments. Its largest revenue stream is typically interest income earned on debt investments (e.g., secured and subordinated loans) made to portfoli...
Prospect Capital Earnings Call Summary
Earnings Call Date:Aug 20, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Nov 11, 2026
Earnings Call Sentiment Positive
The call emphasized strong credit performance, liquidity, long-term track record, a successful exit (Valley Electric) with high realized returns, a meaningful reduction in higher-risk exposures, and active initiatives to capture operational upside via AI. Most financial and portfolio metrics (low nonaccruals, low realized loss rate, high percentage of senior secured loans, significant unencumbered assets, diversified funding) were presented positively. The primary negatives were a flat quarter-over-quarter NII, a high proportion of unsecured funding (though diversified), concentration in middle market lending, limited software exposure, and only modest net originations in the quarter. Overall, the positive operational and credit metrics and the successful portfolio exit and liquidity position outweigh the limited near-term growth and concentration risks.Positive Updates
Net Investment Income Stable
Net investment income (NII) was $78 million for the June quarter, flat sequentially, equating to $0.15 per common share.
Negative Updates
Flat Quarter-over-Quarter NII
NII of $78 million was unchanged from the prior quarter, indicating no near-term growth in reported net investment income.
Read all updates
Q4-2026 Updates
Positive
Negative
Net Investment Income Stable
Net investment income (NII) was $78 million for the June quarter, flat sequentially, equating to $0.15 per common share.
Read all positive updates
Company Guidance
Management's guidance centered on near‑term cash distributions, liquidity and redeployment plans: they declared monthly common distributions of $0.035 per share for September and October and reported Q4 NII of $78 million ($0.15/share), NAV of ~$2.9 billion ($5.71/share), net debt to total assets of 28.6% and unsecured debt plus perpetual preferred at 83.7% of total debt and preferred. They closed the sale of Valley Electric for about $328 million (expected net exit proceeds ~$281 million), realizing a 20.5% gross annualized IRR and 4.8x multiple (pro forma revolver drawn would have been ~$323 million on June 30), and said proceeds (including NPRC unrealized gain of $185 million; NPRC = 14% of investments at cost; 52 properties yielding 5.3%) will be redeployed primarily into first‑lien senior secured corporate loans. Other operational guidance/metrics included Q4 originations of $166 million (91% middle‑market; net originations $120 million after $46 million repayments), nonaccruals ~0.7% of assets, unfunded commitments ~$65 million ($52 million discretionary, ≈1%/0.8% of assets), combined cash + undrawn revolver ~$1.6 billion pre‑Valley sale, $4.2 billion (66%) unencumbered assets, $2.12 billion of bank commitments from 48 banks, revolver pricing SOFR+2.05%, weighted average unsecured debt cost 4.78%, PIK interest 10% of investment income (down 53% vs. 2024), and an expectation that AI/automation could deliver "tens of millions" of annualized cash flow benefit.Prospect Capital Financial Statement Overview
Summary
Income Statement
38
Negative
Balance Sheet
66
Positive
Cash Flow
52
Neutral
| Breakdown | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 639.45M | -276.83M | 467.36M | 87.30M | 739.88M |
| Gross Profit | 509.57M | -406.94M | 320.91M | -60.90M | 622.47M |
| EBITDA | 283.55M | -469.92M | 262.83M | -101.64M | 582.58M |
| Net Income | 153.66M | -469.92M | 262.83M | -101.64M | 582.58M |
Balance Sheet | |||||
| Total Assets | 6.45B | 6.80B | 7.86B | 7.86B | 7.66B |
| Cash, Cash Equivalents and Short-Term Investments | 43.57M | 46.51M | 81.90M | 90.57M | 31.17M |
| Total Debt | 1.86B | 2.09B | 2.43B | 2.58B | 2.74B |
| Total Liabilities | 1.95B | 3.82B | 4.15B | 4.13B | 3.54B |
| Stockholders Equity | 4.50B | 2.99B | 3.71B | 3.73B | 4.12B |
Cash Flow | |||||
| Free Cash Flow | 516.31M | 523.17M | 279.98M | -220.85M | -795.34M |
| Operating Cash Flow | 516.31M | 523.17M | 279.98M | -220.85M | -795.34M |
| Investing Cash Flow | -76.00K | 0.00 | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | -523.60M | -558.25M | -289.76M | 281.13M | 767.09M |
Prospect Capital Technical Analysis
Negative
2.35
Price Trends
2.16
Negative
2.15
Negative
2.27
Negative
Market Momentum
-0.02
Positive
35.56
Neutral
3.75
Positive
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 2.35 is above the 20-day moving average (MA) of 2.15, above the 50-day MA of 2.16, and above the 200-day MA of 2.27, indicating a bearish trend. The MACD of -0.02 indicates Positive momentum. The RSI at 35.56 is Neutral, neither overbought nor oversold. The STOCH value of 3.75 is Positive, 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 | $13.76B | 13.97 | 6.78% | 10.18% | 10.38% | -34.10% | |
70 Outperform | $5.15B | 18.39 | 3.95% | 13.40% | 1.32% | -62.13% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
64 Neutral | $3.28B | 22.80 | 3.82% | 11.00% | -8.83% | -54.08% | |
63 Neutral | $5.57B | 18.58 | 4.78% | 13.05% | -14.94% | -55.20% | |
62 Neutral | $1.09B | 35.65 | 4.09% | 24.50% | 106.57% | ― | |
60 Neutral | $3.07B | -8.13 | -6.65% | 18.60% | -35.39% | -272.02% |
* Financial Sector Average
PSEC
Prospect Capital
2.00
-0.29
-12.51%
GBDC
Golub Capital Bdc
12.54
0.11
0.88%
ARCC
Ares Capital
18.86
0.63
3.44%
FSK
FS KKR Capital
10.97
-1.65
-13.05%
OBDC
Blue Owl Capital
10.30
-0.89
-7.99%
BXSL
Blackstone Secured Lending Fund
23.61
0.32
1.36%
Prospect Capital Corporate Events
Business Operations and StrategyDividendsFinancial Disclosures
Prospect Capital Declares New Monthly Cash Distributions
Positive
Aug 21, 2026
Prospect Capital Corporation, a Nasdaq-listed business development company specializing in middle-market lending and private credit, reported financial results for the quarter and fiscal year ended June 30, 2026, showing net investment income of $...
Business Operations and StrategyPrivate Placements and FinancingShareholder Meetings
Prospect Capital Shareholders Approve Dilutive Equity Issuance Flexibility
Neutral
Jul 7, 2026
On July 7, 2026, Prospect Capital held a virtual Special Meeting of Stockholders at 5:00 p.m. Eastern Time, where shareholders considered a single proposal related to capital-raising flexibility. Stockholders approved renewing the company’s ...
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.