Prospect Capital (NASDAQ:PSEC) Reaches New 52-Week Low - Here's Why

Key Points

• Prospect Capital shares hit a new 52-week low, falling to $1.66 and trading about 0.9% lower, below both its 50-day and 200-day moving averages.
• Analyst sentiment remains negative: one analyst rates the stock “Hold” and two rate it “Sell,” producing an average “Sell” rating with a $2.00 price target.
• The company declared a monthly dividend of $0.035 per share, or $0.42 annualized, implying a 24.6% yield; however, its dividend payout ratio is an unusually high 840%.

Prospect Capital Corporation (NASDAQ:PSEC - Get Free Report)'s stock price hit a new 52-week low during trading on Monday. The company traded as low as $1.66 and last traded at $1.6850, with a volume of 649,525 shares. The stock had previously closed at $1.72.

Analyst Ratings Changes

A number of analysts have recently issued reports on PSEC shares. Zacks Research raised shares of Prospect Capital to a "hold" rating in a report on Monday, October 5th. Wall Street Zen lowered shares of Prospect Capital from a "buy" rating to a "hold" rating in a research report on Saturday, August 22nd. Finally, Weiss Ratings cut Prospect Capital from a "sell (d+)" rating to a "sell (d)" rating in a research note on Wednesday, August 26th. One research analyst has rated the stock with a Hold rating and two have issued a Sell rating to the company. According to MarketBeat, the stock has an average rating of "Sell" and an average target price of $2.00.

Prospect Capital Trading Down 0.9%

The company has a debt-to-equity ratio of 0.64, a quick ratio of 0.87 and a current ratio of 0.87. The firm has a 50-day moving average of $2.18 and a 200-day moving average of $2.32. The firm has a market capitalization of $910.16 million, a P/E ratio of 34.10 and a beta of 0.82.

Prospect Capital (NASDAQ:PSEC - Get Free Report) last released its quarterly earnings data on Thursday, August 20th. The financial services provider reported $0.15 earnings per share for the quarter, beating analysts' consensus estimates of $0.11 by $0.04. Prospect Capital had a return on equity of 12.15% and a net margin of 19.33%. The firm had revenue of $155.76 million during the quarter, compared to analyst estimates of $149.80 million. On average, equities research analysts anticipate that Prospect Capital Corporation will post 0.38 EPS for the current fiscal year.

Prospect Capital Dividend Announcement

The company also recently declared a monthly dividend, which will be paid on Wednesday, November 18th. Investors of record on Wednesday, October 28th will be issued a dividend of $0.0350 per share. This represents a $0.42 dividend on an annualized basis and a yield of 24.6%. The ex-dividend date is Wednesday, October 28th. Prospect Capital's dividend payout ratio is currently 840.00%.

Insiders Place Their Bets

In other news, CEO John Barry. III purchased 1,217,105 shares of the company's stock in a transaction on Friday, September 4th. The stock was acquired at an average price of $2.24 per share, with a total value of $2,726,315.20. Following the transaction, the chief executive officer directly owned 90,479,988 shares of the company's stock, valued at approximately $202,675,173.12. This represents a 1.36% increase in their position. The acquisition was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. 25.94% of the stock is owned by insiders.

Hedge Funds Weigh In On Prospect Capital

A number of hedge funds have recently modified their holdings of PSEC. Private Management Group Inc. increased its holdings in Prospect Capital by 51.7% during the 2nd quarter. Private Management Group Inc. now owns 20,534,804 shares of the financial services provider's stock valued at $47,435,000 after purchasing an additional 6,999,513 shares during the period. Van ECK Associates Corp raised its position in Prospect Capital by 32.7% during 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 purchased a new stake in Prospect Capital in the 2nd quarter worth approximately $9,336,000. Independent Financial Group LLC purchased a new stake in Prospect Capital in the 1st quarter worth approximately $8,644,000. Finally, Private Advisor Group LLC lifted its holdings in Prospect Capital by 0.4% in the 1st 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 period. Hedge funds and other institutional investors own 9.06% of the company's stock.

Prospect Capital Company Profile

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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