Prospect Capital (NASDAQ:PSEC) Sets New 12-Month Low - Time to Sell?

Key Points

• Prospect Capital shares fell to a new 52-week low of $1.58, well below their 50-day and 200-day moving averages. Analysts maintain a consensus “Sell” rating, with an average price target of $2.00.
• The company exceeded quarterly earnings and revenue expectations, reporting $0.15 in EPS versus an estimated $0.11. However, its monthly dividend implies a high 27.2% yield and an exceptionally elevated 840% payout ratio.
• CEO John Barry purchased approximately 1.22 million shares for $2.7 million, while insiders collectively own 25.94% of the company—providing a potential confidence signal despite broader analyst concerns.

Prospect Capital Corporation (NASDAQ:PSEC - Get Free Report)'s stock price reached a new 52-week low during trading on Monday. The company traded as low as $1.58 and last traded at $1.5750, with a volume of 559,745 shares traded. The stock had previously closed at $1.60.

Analyst Upgrades and Downgrades

Several research firms have commented on PSEC. Zacks Research upgraded shares of Prospect Capital to a "hold" rating in a research note on Monday, October 5th. Weiss Ratings lowered Prospect Capital from a "sell (d+)" rating to a "sell (d)" rating in a report on Wednesday, August 26th. Finally, Wall Street Zen downgraded shares of Prospect Capital from a "buy" rating to a "hold" rating in a research report on Saturday, August 22nd. One investment analyst has rated the stock with a Hold rating and two have given a Sell rating to the stock. According to MarketBeat, Prospect Capital presently has a consensus rating of "Sell" and a consensus price target of $2.00.

Prospect Capital Stock Performance

The firm has a market cap of $824.75 million, a price-to-earnings ratio of 30.90 and a beta of 0.82. The company has a quick ratio of 0.87, a current ratio of 0.87 and a debt-to-equity ratio of 0.64. The stock has a fifty day moving average price of $2.12 and a 200-day moving average price of $2.29.

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

Prospect Capital Dividend Announcement

The business also recently declared a monthly dividend, which will be paid on Wednesday, November 18th. Stockholders of record on Wednesday, October 28th will be issued a $0.0350 dividend. This represents a $0.42 dividend on an annualized basis and a dividend yield of 27.2%. The ex-dividend date is Wednesday, October 28th. Prospect Capital's dividend payout ratio (DPR) is currently 840.00%.

Insiders Place Their Bets

In related news, CEO John Barry. III bought 1,217,105 shares of the stock in a transaction on Friday, September 4th. The shares were bought at an average cost of $2.24 per share, for a total transaction of $2,726,315.20. Following the completion of the transaction, the chief executive officer owned 90,479,988 shares of the company's stock, valued at $202,675,173.12. This represents a 1.36% increase in their position. The acquisition was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. Insiders own 25.94% of the company's stock.

Hedge Funds Weigh In On Prospect Capital

Several hedge funds and other institutional investors have recently bought and sold shares of the company. Caitong International Asset Management Co. Ltd lifted its holdings in shares of Prospect Capital by 55.5% in the second quarter. Caitong International Asset Management Co. Ltd now owns 16,970 shares of the financial services provider's stock valued at $39,000 after purchasing an additional 6,056 shares in the last quarter. Private Advisor Group LLC boosted its holdings in shares of 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 purchasing an additional 6,262 shares during the last quarter. WINTON GROUP Ltd purchased a new stake in Prospect Capital in the 2nd quarter valued at about $35,000. ARS Wealth Advisors Group LLC acquired a new position in Prospect Capital during the third quarter worth approximately $36,000. Finally, GTS Securities LLC acquired a new stake in shares of Prospect Capital during the 2nd quarter worth $40,000. 9.06% of the stock is owned by institutional investors and hedge funds.

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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