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Prospect Capital Corporation (PSEC)
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Upturn Advisory Summary
02/24/2026: PSEC (1-star) has a low Upturn Star Rating. Not recommended to BUY.
Upturn Star Rating
Not Recommended Performance
These Stocks/ETFs, based on Upturn Advisory, consistently fall short of market performance, signaling caution before investing.
Number of Analysts
1 Analysts rated it
Very few follow this stock; limited insights, higher-risk early investing.
1 Year Target Price $2.5
1 Year Target Price $2.5
| 0 | Strong Buy |
| 0 | Buy |
| 0 | Hold |
| 0 | Sell |
| 1 | Strong Sell |
Key Highlights
Company Size Small-Cap Stock | Market Capitalization 1.38B USD | Price to earnings Ratio - | 1Y Target Price 2.5 |
Price to earnings Ratio - | 1Y Target Price 2.5 | ||
Volume (30-day avg) 1 | Beta 0.86 | 52 Weeks Range 2.36 - 3.78 | Updated Date 02/25/2026 |
52 Weeks Range 2.36 - 3.78 | Updated Date 02/25/2026 | ||
Dividends yield (FY) 19.08% | Basic EPS (TTM) -0.82 |
Earnings Date
Report Date 2026-02-11 | When - | Estimate 0.1 | Actual 0.19 |
Profitability
Profit Margin -34.88% | Operating Margin (TTM) 70.27% |
Management Effectiveness
Return on Assets (TTM) 4.27% | Return on Equity (TTM) -4.85% |
Valuation
Trailing PE - | Forward PE - | Enterprise Value 4817100800 | Price to Sales(TTM) 2.06 |
Enterprise Value 4817100800 | Price to Sales(TTM) 2.06 | ||
Enterprise Value to Revenue 14.9 | Enterprise Value to EBITDA 9.42 | Shares Outstanding 482489809 | Shares Floating - |
Shares Outstanding 482489809 | Shares Floating - | ||
Percent Insiders 27.9 | Percent Institutions 17.97 |
Upturn AI SWOT
Prospect Capital Corporation
Company Overview
History and Background
Prospect Capital Corporation (NASDAQ: PSEC) was founded in 2004. It is a Business Development Company (BDC) that provides debt and equity capital to lower middle-market companies. Over the years, it has evolved into a significant player in the private credit market, focusing on recurring revenue businesses.
Core Business Areas
- Direct Lending: Providing secured and unsecured debt financing to companies, often to fund acquisitions, recapitalizations, or growth initiatives.
- Sponsorship Financing: Investing in companies sponsored by private equity firms, offering a blend of debt and equity solutions.
- Equity Investments: Taking minority equity stakes in companies alongside its debt investments, seeking capital appreciation.
- Middle Market Focus: Primarily targeting companies with EBITDA between $5 million and $50 million.
Leadership and Structure
Prospect Capital Corporation is externally managed by Prospect Capital Management LLC. The leadership team includes key executives responsible for investment strategy, operations, and financial management. As a BDC, it operates as a closed-end investment company registered under the Investment Company Act of 1940.
Top Products and Market Share
Key Offerings
- Senior Secured Loans: These are the primary debt instruments offered, providing a first lien on the borrower's assets. Market share data for specific product lines within BDCs is not typically publicly disclosed in a granular manner. Competitors include other BDCs and private credit funds.
- Subordinated Debt: Unsecured or second lien debt that ranks lower in priority than senior secured debt. Competitors include other BDCs and specialized credit funds.
- Mezzanine Capital: A hybrid of debt and equity financing, often with equity kickers. Competitors include specialized mezzanine funds and other BDCs.
- Preferred Equity: A class of stock that has a higher claim on assets and earnings than common stock. Competitors include other BDCs and private equity firms.
Market Dynamics
Industry Overview
Prospect Capital Corporation operates within the private credit market, which has seen significant growth due to increased demand for flexible financing solutions from middle-market companies and a more constrained traditional banking environment. The industry is characterized by a diverse range of participants, including BDCs, private equity firms, and institutional investors. Interest rate environment and economic stability are key drivers.
Positioning
Prospect Capital Corporation is positioned as a significant provider of flexible, non-dilutive and growth capital to the lower middle market. Its ability to structure customized debt and equity solutions, coupled with its experienced management team, provides a competitive advantage. Its scale allows it to participate in larger deals compared to smaller BDCs.
Total Addressable Market (TAM)
The total addressable market for private credit is substantial and continues to grow. Estimates vary, but the global private debt market is projected to reach trillions of dollars. Prospect Capital Corporation's TAM is focused on the U.S. lower middle market, a segment where financing needs are often underserved by traditional banks.
Upturn SWOT Analysis
Strengths
- Diversified investment portfolio across various industries and companies.
- Experienced management team with a long track record.
- Ability to originate and structure complex debt and equity deals.
- Access to a significant capital base to deploy.
- Strong focus on recurring revenue businesses which can provide stable income.
Weaknesses
- Reliance on external manager, which can create agency issues.
- Exposure to economic downturns affecting its portfolio companies.
- Potential for higher leverage compared to some peers.
- Liquidity of its investments can be limited.
- Regulatory scrutiny inherent to BDCs.
Opportunities
- Continued growth in demand for private credit solutions.
- Potential for opportunistic distressed investing during economic volatility.
- Expansion into new industry verticals or geographies.
- Leveraging technology for deal sourcing and portfolio management.
- Interest rate increases can boost investment income.
Threats
- Rising interest rates increasing borrowing costs for portfolio companies.
- Increased competition in the private credit space.
- Potential for defaults and credit losses in its portfolio.
- Changes in regulatory landscape for BDCs.
- Economic recession impacting portfolio company performance.
Competitors and Market Share
Key Competitors
- Ares Capital Corporation (ARCC)
- Owl Rock Capital Corporation (ORCC)
- BlackRock Capital Investment Corporation (BKCC)
Competitive Landscape
Prospect Capital Corporation competes with a range of other BDCs and private debt funds. Its competitive advantages lie in its established track record, deal origination capabilities, and the flexibility to provide customized solutions. However, it faces competition from larger, more diversified players and specialized funds focusing on niche markets.
Growth Trajectory and Initiatives
Historical Growth: Prospect Capital Corporation has demonstrated growth in its assets under management and investment portfolio size over the years, driven by strategic capital deployment. Its ability to consistently originate new investments has been a key factor in its historical growth.
Future Projections: Future growth is projected to be driven by continued deployment of capital into its target market, successful management of its existing portfolio, and potentially accretive acquisitions or strategic partnerships. Analyst estimates would provide quantitative projections.
Recent Initiatives: Recent initiatives may include focusing on specific sectors with strong secular tailwinds, enhancing operational efficiencies through technology, and managing its capital structure to optimize returns.
Summary
Prospect Capital Corporation is a well-established BDC with a strong focus on the lower middle market. Its diversified portfolio and experienced management team are key strengths. However, it faces risks from economic downturns, rising interest rates, and increasing competition. Continued prudent deployment of capital and effective risk management are crucial for its future success.
Similar Stocks
Sources and Disclaimers
Data Sources:
- Company SEC Filings (10-K, 10-Q)
- Financial news and analysis websites
- Industry reports on private credit
Disclaimers:
This JSON output is generated based on publicly available information and is intended for informational purposes only. It does not constitute financial advice. Investing in securities carries risks, and investors should conduct their own due diligence.
AI Summarization is directionally correct and might not be accurate.
Summarized information shown could be a few years old and not current.
Fundamental Rating based on AI could be based on old data.
AI-generated summaries may have inaccuracies (hallucinations). Please verify the information before taking action.
About Prospect Capital Corporation
Exchange NASDAQ | Headquaters New York, NY, United States | ||
IPO Launch date 2004-07-27 | Chairman of the Board & CEO Mr. John Francis Barry III, J.D. | ||
Sector Financial Services | Industry Asset Management | Full time employees - | |
Full time employees - | |||
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 betw
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