Prospect Capital (NASDAQ:PSEC) Hits New 12-Month Low - Should You Sell?

Key Points

• Prospect Capital hit a new 52-week low, trading as low as $2.11 as investors continued to pressure the stock.
• Wall Street remains cautious: the consensus rating is Sell with a consensus price target of $2.00, though one firm recently upgraded the stock to Buy while Wells Fargo cut its target to $2.00 and kept an Underweight rating.
• The company continues to highlight income appeal, announcing a monthly dividend of $0.035 per share for a 19.7% annualized yield, while CEO John F. Barry also bought more than 1.0 million shares in June.

Prospect Capital Corporation (NASDAQ:PSEC - Get Free Report) reached a new 52-week low during trading on Wednesday . The stock traded as low as $2.11 and last traded at $2.1350, with a volume of 4996102 shares. The stock had previously closed at $2.15.

Analysts Set New Price Targets

A number of brokerages have weighed in on PSEC. Weiss Ratings upgraded Prospect Capital from a "sell (d)" rating to a "sell (d+)" rating in a report on Friday, May 29th. Wall Street Zen raised shares of Prospect Capital from a "hold" rating to a "buy" rating in a research report on Sunday, June 21st. Finally, Wells Fargo & Company lowered their price objective on shares of Prospect Capital from $2.50 to $2.00 and set an "underweight" rating for the company in a research note on Tuesday, May 12th. Two investment analysts have rated the stock with a Sell rating, According to data from MarketBeat.com, the company has a consensus rating of "Sell" and a consensus price target of $2.00.

Prospect Capital Price Performance

The firm has a market capitalization of $1.07 billion, a P/E ratio of -5.76 and a beta of 0.78. The business has a 50-day moving average of $2.26 and a 200 day moving average of $2.56. The company has a current ratio of 0.79, a quick ratio of 0.79 and a debt-to-equity ratio of 0.59.

Prospect Capital (NASDAQ:PSEC - Get Free Report) last posted its quarterly earnings results on Thursday, May 7th. The financial services provider reported $0.16 earnings per share for the quarter, topping analysts' consensus estimates of $0.11 by $0.05. The business had revenue of $150.07 million for the quarter, compared to the consensus estimate of $163.23 million. Prospect Capital had a positive return on equity of 12.03% and a negative net margin of 10.42%.

Prospect Capital Announces Dividend

The firm also recently announced a monthly dividend, which will be paid on Thursday, September 17th. Stockholders of record on Thursday, August 27th will be paid a dividend of $0.035 per share. This represents a c) dividend on an annualized basis and a dividend yield of 19.7%. The ex-dividend date is Thursday, August 27th. Prospect Capital's payout ratio is presently -113.51%.

Insiders Place Their Bets

In related news, CEO John F. Barry purchased 1,067,648 shares of Prospect Capital stock in a transaction that occurred on Tuesday, June 23rd. The stock was bought at an average price of $2.27 per share, for a total transaction of $2,423,560.96. Following the completion of the transaction, the chief executive officer owned 89,213,725 shares in the company, valued at $202,515,155.75. This represents a 1.21% increase in their ownership of the stock. The acquisition was disclosed in a filing with the SEC, which is accessible through this hyperlink. Insiders have bought a total of 2,732,648 shares of company stock worth $6,216,361 in the last three months. 0.03% of the stock is currently owned by corporate insiders.

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Catalyst Financial Partners LLC purchased a new stake in shares of Prospect Capital during the 4th quarter worth approximately $26,000. Bfsg LLC purchased a new position in Prospect Capital in the fourth quarter valued at approximately $27,000. Ground Swell Capital LLC bought a new position in Prospect Capital during the fourth quarter valued at $28,000. Schonfeld Strategic Advisors LLC bought a new position in Prospect Capital during the fourth quarter valued at $28,000. Finally, Evergreen Capital Management LLC purchased a new stake in Prospect Capital in the fourth quarter worth $30,000. 9.06% of the stock is currently owned by hedge funds and other institutional investors.

Prospect Capital Company Profile

Prospect Capital Corporation is a publicly traded business development company listed on the Nasdaq stock exchange that specializes in providing private debt and equity financing solutions to middle-market companies across the United States. Structured as a closed-end, non-diversified management investment company under the Investment Company Act of 1940, Prospect Capital offers investors access to a diversified portfolio of senior secured loans, subordinated debt and selective equity interests in privately held businesses.

Since its founding in 2004, Prospect Capital has focused on tailoring financing structures to meet the growth, acquisition and recapitalization needs of its portfolio companies.

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