Prospect Capital (NASDAQ:PSEC) Hits New 1-Year Low - Here's What Happened

Key Points

• Prospect Capital shares hit a new 52-week low, trading near $1.98 versus a previous close of $2.00. The stock remains below its 50-day and 200-day moving averages.
• Analyst sentiment is negative: Wall Street Zen downgraded the shares to “hold,” Weiss Ratings maintained a “sell” view, and the consensus rating is “Sell” with a $2.00 price target.
• The company exceeded quarterly earnings and revenue estimates, but its $0.035 monthly dividend implies a 21.1% yield and an exceptionally high 840% payout ratio. CEO John Barry also bought approximately $2.7 million of shares, increasing insider ownership to 25.94%.

Prospect Capital Corporation (NASDAQ:PSEC - Get Free Report) shares hit a new 52-week low on Monday. The company traded as low as $1.98 and last traded at $1.9750, with a volume of 547158 shares changing hands. The stock had previously closed at $2.00.

Wall Street Analysts Forecast Growth

Several research analysts have recently weighed in on PSEC shares. Wall Street Zen cut shares of Prospect Capital from a "buy" rating to a "hold" rating in a report on Saturday, August 22nd. Weiss Ratings cut shares of Prospect Capital from a "sell (d+)" rating to a "sell (d)" rating in a research report on Wednesday, August 26th. Two analysts have rated the stock with a Sell rating, According to data from MarketBeat.com, Prospect Capital has a consensus rating of "Sell" and an average price target of $2.00.

Prospect Capital Price Performance

The company has a current ratio of 0.87, a quick ratio of 0.87 and a debt-to-equity ratio of 0.64. The company has a 50 day simple moving average of $2.22 and a 200 day simple moving average of $2.35. The stock has a market cap of $1.06 billion, a P/E ratio of 39.50 and a beta of 0.82.

Prospect Capital (NASDAQ:PSEC - Get Free Report) last issued its quarterly earnings results on Thursday, August 20th. The financial services provider reported $0.15 earnings per share for the quarter, topping the consensus estimate of $0.11 by $0.04. The company had revenue of $155.76 million during the quarter, compared to analysts' expectations of $149.80 million. Prospect Capital had a net margin of 19.33% and a return on equity of 12.15%.

Prospect Capital Dividend Announcement

The firm also recently declared a monthly dividend, which will be paid on Wednesday, November 18th. Shareholders of record on Wednesday, October 28th will be paid a $0.0350 dividend. This represents a $0.42 annualized dividend and a yield of 21.1%. The ex-dividend date is Wednesday, October 28th. Prospect Capital's payout ratio is presently 840.00%.

Insider Buying and Selling

In related news, CEO John Barry. III acquired 1,217,105 shares of the firm's stock in a transaction dated Friday, September 4th. The stock was bought at an average price of $2.24 per share, for a total transaction of $2,726,315.20. Following the acquisition, the chief executive officer directly owned 90,479,988 shares of the company's stock, valued at approximately $202,675,173.12. The trade was a 1.36% increase in their ownership of the stock. The acquisition was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this link. 25.94% of the stock is owned by company insiders.

Institutional Trading of Prospect Capital

Several institutional investors and hedge funds have recently bought and sold shares of PSEC. Private Management Group Inc. raised its position in Prospect Capital by 51.7% during the second quarter. Private Management Group Inc. now owns 20,534,804 shares of the financial services provider's stock worth $47,435,000 after acquiring an additional 6,999,513 shares in the last quarter. Van ECK Associates Corp lifted its stake in Prospect Capital by 32.7% in the 2nd quarter. Van ECK Associates Corp now owns 9,685,724 shares of the financial services provider's stock valued at $22,374,000 after purchasing an additional 2,388,990 shares during the last quarter. Legal & General Group Plc bought a new position in Prospect Capital during the second quarter worth about $9,336,000. Independent Financial Group LLC bought a new position in Prospect Capital during the first quarter worth about $8,644,000. Finally, Private Advisor Group LLC increased its position in Prospect Capital by 0.4% during the first quarter. Private Advisor Group LLC now owns 1,711,638 shares of the financial services provider's stock worth $4,467,000 after buying an additional 6,262 shares during the last quarter. Institutional investors own 9.06% of the company's stock.

About Prospect Capital

Prospect Capital Corporation is a business development company that provides financing to privately held, middle-market companies. The company primarily invests in first-lien and second-lien loans, subordinated debt, and other debt and equity securities. Its investments are designed to support acquisitions, recapitalizations, growth initiatives, refinancings, and other corporate purposes.

Through its investment platform, Prospect Capital also participates in specialized finance and structured investment activities, including investments in real estate-related assets and other operating businesses.

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