Prospect Capital (NASDAQ:PSEC) Shares Down 4.6% - Here's Why

Key Points

• Prospect Capital's shares fell by 4.6% to $2.61, with trading volume significantly lower than average, marking a decline of 19% from the usual daily volume.
• Analysts are bearish on the stock, with Wells Fargo lowering the target price from $3.00 to $2.50 and changing the rating to "underweight," while the consensus rating remains a "Sell."
• The company reported better-than-expected quarterly earnings of $0.17 per share but has a negative net margin of 69.68%, indicating ongoing financial challenges.

Prospect Capital Corporation (NASDAQ:PSEC - Get Free Report) shares dropped 4.6% on Friday . The company traded as low as $2.60 and last traded at $2.61. Approximately 2,593,988 shares traded hands during mid-day trading, a decline of 19% from the average daily volume of 3,212,301 shares. The stock had previously closed at $2.73.

Analyst Upgrades and Downgrades

PSEC has been the topic of a number of analyst reports. Wells Fargo & Company lowered their target price on shares of Prospect Capital from $3.00 to $2.50 and set an "underweight" rating on the stock in a report on Thursday, August 28th. Wall Street Zen lowered shares of Prospect Capital from a "hold" rating to a "sell" rating in a report on Saturday, August 30th. One equities research analyst has rated the stock with a Sell rating, According to MarketBeat.com, the stock presently has a consensus rating of "Sell" and an average target price of $2.50.

Prospect Capital Stock Performance

The company's 50 day simple moving average is $2.93 and its 200 day simple moving average is $3.35. The company has a debt-to-equity ratio of 0.70, a quick ratio of 1.16 and a current ratio of 1.16. The stock has a market cap of $1.21 billion, a PE ratio of -1.95 and a beta of 0.85.

Prospect Capital (NASDAQ:PSEC - Get Free Report) last issued its quarterly earnings results on Tuesday, August 26th. The financial services provider reported $0.17 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.13 by $0.04. Prospect Capital had a negative net margin of 69.68% and a positive return on equity of 12.14%. The company had revenue of $166.95 million during the quarter, compared to analyst estimates of $167.08 million.

Prospect Capital Dividend Announcement

The business also recently declared a monthly dividend, which will be paid on Tuesday, November 18th. Stockholders of record on Wednesday, October 29th will be paid a dividend of $0.045 per share. The ex-dividend date is Wednesday, October 29th. This represents a c) annualized dividend and a dividend yield of 20.7%. Prospect Capital's dividend payout ratio (DPR) is presently -40.30%.

Insider Activity

In related news, CEO John F. Barry purchased 741,158 shares of the firm's stock in a transaction dated Wednesday, September 24th. The stock was bought at an average price of $2.62 per share, for a total transaction of $1,941,833.96. Following the purchase, the chief executive officer directly owned 85,142,158 shares in the company, valued at approximately $223,072,453.96. This trade represents a 0.88% increase in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. In the last ninety days, insiders have purchased 1,502,158 shares of company stock worth $3,966,419. Company insiders own 27.98% of the company's stock.

Institutional Inflows and Outflows

Institutional investors and hedge funds have recently bought and sold shares of the business. VSM Wealth Advisory LLC bought a new position in Prospect Capital in the 1st quarter worth approximately $25,000. American National Bank & Trust bought a new position in Prospect Capital in the 2nd quarter worth approximately $32,000. KG&L Capital Management LLC bought a new position in Prospect Capital in the 1st quarter worth approximately $41,000. Significant Wealth Partners LLC bought a new position in Prospect Capital in the 2nd quarter worth approximately $36,000. Finally, Private Trust Co. NA boosted its holdings in Prospect Capital by 38.5% in the 2nd quarter. Private Trust Co. NA now owns 11,639 shares of the financial services provider's stock worth $37,000 after buying an additional 3,238 shares during the period. 9.06% of the stock is owned by institutional investors.

About Prospect Capital

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, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending and bridge transactions.

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