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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#3070
Positioning
Market Dominance
Financial
Financial Services
$1.3B
John F. Barry
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, growth capital, development, capital expenditures and capital expenditures. The fund typically invests across all industry sectors, with a particular expertise in the energy and industrial sectors.
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Dates updated upon official exchange announcement.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = PSEC ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$GBDC GOLUB CAPITAL BDC, Inc. | 64 | 91 | 89 | 57 | 22.5x | 6.6x | 4.4% | 2.0% | 100.0% | 82.2% | 23.7% | 79.9% | 12.4% | 123.0x | $3.5B | VS | |
$SAR SARATOGA INVESTMENT CORP. | 55 | 30 | 69 | 85 | 1.4x | 2.3x | 43.6% | 22.2% | - | - | 182.5% | -10.7% | 17.0% | 263.0x | $362M | VS | |
$CGBD Carlyle Secured Lending, Inc. | 53 | 72 | 67 | 40 | 14.2x | 6.1x | 6.8% | 2.0% | 100.0% | 73.2% | 24.8% | 18.0% | 13.6% | 111.0x | $911M | VS | |
$BBDC Barings BDC, Inc. | 53 | 25 | 31 | 79 | 23.4x | 10.1x | 9.8% | - | - | - | - | -103.3% | 13.6% | 139.0x | $921M | VS | |
$SLRC SLR Investment Corp. | 52 | 33 | 47 | 75 | 8.9x | 8.7x | 9.2% | 3.6% | - | - | 60.5% | 3.7% | 10.7% | 115.0x | $834M | VS | |
$TRIN Trinity Capital Inc. | 51 | 26 | 29 | 90 | 9.8x | 52.5x | 14.6% | 9.6% | - | - | 49.8% | 16.0% | 13.2% | 118.0x | $1.1B | VS | |
$CSWC CAPITAL SOUTHWEST CORP | 51 | 29 | 36 | 93 | 9.6x | 10.0x | 14.5% | 6.2% | - | - | 53.5% | 18.2% | 11.7% | 108.0x | $1.3B | VS | |
$ICMB Investcorp Credit Management BDC, Inc. | 50 | 26 | 26 | 86 | - | - | -22.2% | - | - | - | -49.4% | -76.3% | 23.4% | 177.0x | $38M | VS | |
$FDUS FIDUS INVESTMENT Corp | 50 | 31 | 41 | 64 | 9.4x | 10.4x | 11.3% | 6.3% | - | - | 48.5% | 17.9% | 11.2% | 75.0x | $717M | VS | |
$GAIN GLADSTONE INVESTMENT CORPORATION\DE | 49 | 30 | 27 | 90 | - | - | 9.5% | 23.6% | - | - | 423.3% | 3.9% | 10.8% | 96.0x | $551M | VS | |
$PSEC PROSPECT CAPITAL CORP | 43 | 38 | 66 | 53 | 4.0x | 3.9x | -1.3% | -0.6% | - | - | -10.8% | 1.1% | 20.5% | 62.0x | $1.3B | ||
| SECTOR BENCH | - | - | - | - | - | 9.8x | 9.5x | 6.8% | 3.2% | 100.0% | 59.1% | 45.5% | -13.6% | 13.5% | 1.2x | - | REF |
PROSPECT CAPITAL CORP (PSEC) receives a "Reduce" rating with a composite score of 43.3/100. It ranks #3070 out of 7,333 stocks in our coverage universe and carries a 2-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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YOY expansion rate
Bottom-line conversion
Equity capital efficiency
Asset base utilization
Financial leverage load
Direct cash return
John F. Barry
Chief Executive Officer
38
22
18
Audit Verdict: Lower quality and stability scores may indicate governance concerns.
No recent insider transactions available for PSEC
In-line with peers — no strong momentum signal
Trading at a discount to fundamentals — favorable entry valuation
Average quality profile
High volatility — wider range of outcomes increases timing risk
Aggressive spending — empire-building risk, dilutive growth
Mid-range overall rating
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Relative valuation derived from Financial sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for PSEC.
View All RatingsMaterial decline in asset turnover efficiency detected
| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 38 | 89 | -51DRAG |
| MOMENTUM | 53 | 57 | -4NEUTRAL |
| VALUATION | 66 | 92 | -26DRAG |
| INVESTMENT | 22 | 5 | +17ALPHA |
| STABILITY | 18 | 3 | +15ALPHA |
| SHORT INT | 28 | 8 | +20ALPHA |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROE proxy -1.3% (sector 6.8%)
GM N/A vs sector 100%, OM N/A vs sector 59%
Capital turnover N/A
Rev growth 1%, 4yr history
Interest coverage N/A
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
PROSPECT CAPITAL CORP receives a Reduce rating from our analysis, with a composite score of 43.3/100 and 2 out of 5 stars, ranking #3070 out of 7,333 stocks. PSEC's factor profile shows weakness across multiple dimensions, suggesting the stock may underperform going forward. Existing holders may want to consider trimming positions or tightening stop-losses.
PSEC's quality score of 38/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of -1.3% (sector avg: 6.8%), net margins of -10.8% (sector avg: 45.5%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
PSEC's value score of 66/100 indicates the stock is fairly valued based on its current fundamentals. Key valuation metrics include a P/E ratio of 4.01x, an EV/EBITDA of 3.91x, a P/B ratio of 0.46x. At this level, neither a clear bargain nor overpriced, the stock's attractiveness depends more on forward growth expectations and qualitative factors.
PROSPECT CAPITAL CORP's investment score of 22/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of 1.1% vs. a sector average of -13.6% and a return on assets of -0.6% (sector: 3.2%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
PSEC demonstrates moderate momentum with a score of 53/100, suggesting a neutral price trend without strong directional conviction. Revenue growth stands at 1.1% year-over-year, while a beta of 0.75 reflects its sensitivity to broader market moves. Moderate momentum may indicate the stock is consolidating or transitioning between trends, warranting close monitoring of upcoming catalysts.
PROSPECT CAPITAL CORP registers a low stability score of 18/100, indicating high volatility and potentially stressed financial conditions. Key stability metrics include a beta of 0.75 and a debt-to-equity ratio of 62.00x (sector avg: 1.2x). Stocks at this level carry elevated capital loss risk and may be unsuitable for conservative portfolios without careful risk management.
PROSPECT CAPITAL CORP's short interest score of 28/100 reveals significant bearish positioning, suggesting institutional investors are actively betting against the stock. Specific risk factors include elevated leverage (D/E: 62.00x), small-cap liquidity risk. At $1.3B (small-cap), PSEC carries meaningful risk and is best suited for investors with high risk tolerance who have thoroughly evaluated the bear thesis.
PROSPECT CAPITAL CORP offers an attractive dividend yield of 20.5%, placing it among the higher-yielding stocks in its peer group. This compares to a sector average dividend yield of 13.5%. A yield this high can provide meaningful income, but investors should verify the payout is sustainable by examining the payout ratio, free cash flow coverage, and any history of dividend cuts.
PROSPECT CAPITAL CORP is a small-cap company in the Financial sector, ranked #15 of 38 in its sector (61st percentile) and #3070 of 7,333 overall (58th percentile). Key comparisons include ROE of -1.3% trailing the 6.8% sector median. This above-median position indicates PSEC is outperforming a majority of its Financial peers, though there is room to close the gap with sector leaders.
While PSEC currently exhibits a REDUCE profile, superior opportunities exist within the FINANCIAL sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
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Improvement in Stability (18) would have the largest impact on the composite score.
RANK #15 OF 38 IN FINANCIALS
EV/EBITDA 59% BELOW SECTOR MEDIAN (FAVORABLE)
ROE 119% BELOW SECTOR MEDIAN
Debt/Equity 4961% ABOVE SECTOR MEDIAN
AUDIT DATA AS OF DEC 31, 2025 (Q3 FY2025)
We rate PROSPECT CAPITAL CORP (PSEC) as a Reduce with a composite score of 43.3/100 at a current price of $2.88. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.
The rating is primarily driven by strength in value (66th percentile) and momentum (53th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (18th percentile) and investment (22th percentile) tempers our overall conviction. We assign a No Moat rating (28/100), High uncertainty, and Poor capital allocation.
Key items to watch: the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.
PROSPECT CAPITAL CORP holds an above-average position (#15 of 38) within the Financial sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 43.3/100 places it at rank #3070 in our full 7,333-stock universe. At $1.3B in market capitalization, PROSPECT CAPITAL CORP is a small-cap player in the Financial space, which limits certain scale advantages but may allow for more agile strategic execution.
Revenue is growing at 1%, though momentum at the 53th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.
Margin data is not available for PROSPECT CAPITAL CORP, which limits our assessment of the company's cost structure and operating efficiency. We rely on factor-based signals to infer business quality in the absence of detailed margin data.
At a current price of $2.88, PROSPECT CAPITAL CORP is trading near fair value based on current fundamentals. Our value factor score of 66/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.
The stock currently trades at a P/E of 4.0x (a 59% discount to the sector median of 9.8x), EV/EBITDA of 3.9x (discounted to peers), P/B of 0.5x, P/S of 4.0x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.
A value factor score of 66/100 suggests the market is underpricing these fundamentals, creating a potential margin of safety for new investors.
A 20.51% dividend yield provides income while you wait, and dividends historically account for a significant portion of total equity returns.
The Reduce rating (composite 43.3/100) reflects multi-factor weakness, and historically, stocks in this scoring range have underperformed the market by a meaningful margin.
Thin net margins of -10.8% provide limited cushion against cost pressures, competitive pricing, or macroeconomic headwinds — even small changes in costs could swing the company to a loss.
We assign a High uncertainty rating to PROSPECT CAPITAL CORP. Key risk factors include current negative profitability (net margin -10.8%), below-average price stability (18th percentile), the combination of leverage (62% D/E) and thin margins (-10.8% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.
Specific risk factors that inform our assessment include: current negative profitability (net margin -10.8%); below-average price stability (18th percentile); the combination of leverage (62% D/E) and thin margins (-10.8% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 18th percentile and quality factor at the 38th percentile provide a quantitative summary of the overall risk landscape.
Key risk mitigants include: a 20.51% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.
We rate PROSPECT CAPITAL CORP's capital allocation as Poor. Key concerns include low returns on equity (-1.3%), negative profitability, weak asset returns (ROA -0.6%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — PROSPECT CAPITAL CORP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.
Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.
In summary, PROSPECT CAPITAL CORP receives a Reduce rating with a composite score of 43.3/100 (rank #3070 of 7,333). Our quantitative framework assigns a No Moat (28/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 39/100.
Our analysis does not support a constructive view on PROSPECT CAPITAL CORP at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.
Analysis derived from Blank Capital Research quantitative terminal. For informational purposes only. No trade solicitation. Past performance not indicative of future results. Consult a qualified advisor.
We do not assign PROSPECT CAPITAL CORP a meaningful economic moat, scoring 28/100 on our composite assessment. Current fundamentals do not demonstrate the kind of durable competitive advantages — such as superior returns on invested capital, margin superiority, or reinvestment efficiency — that would protect the company from competitive erosion over the long term. The highest-scoring pillar, margin superiority, reached only 10/20.
The strongest moat sources are margin superiority (10/20) and financial resilience (7.3/20). GM N/A vs sector 100%, OM N/A vs sector 59%. Interest coverage N/A. These pillars form the core of PROSPECT CAPITAL CORP's competitive identity and are the primary drivers of excess returns in our framework.
Areas of relative weakness include reinvestment efficiency (0/20) and economic value creation (3.8/20). Capital turnover N/A. Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.
Our moat trend assessment is Stable. Multi-year ROIC and operating margin trajectories show neither meaningful improvement nor deterioration, suggesting the competitive position is steady. We expect PROSPECT CAPITAL CORP's moat profile to remain largely unchanged absent a material shift in return on capital or industry dynamics.
Key profit drivers are not clearly identifiable from current fundamentals. This may reflect a company in transition, a cyclical downturn, or structural challenges in the business model. We assign a quality factor of 38/100 which further underscores our concern regarding earnings sustainability.
The margin profile shows net margins of -10.8%. Return metrics include ROE of -1.3% and ROA of -0.6%. Relative to the Financial sector, sector comparison data is limited, and ROE of -1.3% compares to a sector median of 6.8%.
The balance sheet reflects moderate leverage with D/E of 62%, a dividend yield of 20.51%, revenue growth of 1%. The sector median D/E is 1%, putting PROSPECT CAPITAL CORP at higher leverage than the typical peer. Overall balance sheet health is adequate for the current business environment.
Above 50MA
37.18%
Net New Highs
+51081
Prospect Capital (PSEC) reported an increase in its Q2 core earnings and total investment income compared to the previous quarter. The business development company's stock rose 2.7% in after-hours trading following the announcement.
Prospect Capital Corporation (NASDAQ:PSEC) reported Q2 2026 net investment income of $91 million ($0.19 per share) and announced monthly distributions of $0.045 per share for February, March, and April. The company is strategically shifting its portfolio towards first-lien senior secured middle-market loans, reducing second-lien exposure and exiting subordinated structured notes and targeted equity-linked assets. Management also discussed their successful long-term investment in First Tower and their cautious approach to software-related investments, which they attribute to their strong underwriting culture focused on principal protection and cash flow.
Prospect Capital (PSEC) recently sank to a new 52-week low of $2.45, closing at $2.5050. The company announced a monthly dividend of $0.045, yielding 21.7%, despite mixed quarterly results that showed an EPS beat but a significant revenue miss and negative net margin. Analysts have a consensus "Sell" rating for Prospect Capital, with a target price of $2.50.
Prospect Capital Corporation announced the pricing of a $167 million institutional offering of 5.5% Series A Notes due December 31, 2030. The offering was oversubscribed, received an ilAA- rating from S&P Global Ratings Maalot, and the notes are expected to list and commence trading on the Tel Aviv Stock Exchange on November 2, 2025. This move strengthens Prospect Capital's financing sources with long-term, fixed-rate debt.
Prospect Capital Corp. announced a $19 million senior secured debt investment to support Pinnacle Treatment Centers, Inc.'s acquisition of Endeavor House, significantly expanding Pinnacle's addiction treatment service offering. Additionally, Prospect Capital made a $30 million senior secured term loan investment for a logistics company acquisition, bringing its new originations since September 30, 2010, to over $185 million.