Prospect Capital Corporation (NASDAQ: PSEC) is one of 576 public companies in the “Closed End Funds” industry, but how does it compare to its peers? We will compare Prospect Capital Corporation to similar companies based on the strength of its institutional ownership, risk, dividends, analyst recommendations, valuation, profitability and earnings.

Volatility and Risk

Prospect Capital Corporation has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500. Comparatively, Prospect Capital Corporation’s peers have a beta of 0.55, indicating that their average stock price is 45% less volatile than the S&P 500.

Dividends

Prospect Capital Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 12.0%. Prospect Capital Corporation pays out 102.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Closed End Funds” companies pay a dividend yield of 8.8% and pay out 86.0% of their earnings in the form of a dividend.

Insider & Institutional Ownership

15.2% of Prospect Capital Corporation shares are owned by institutional investors. Comparatively, 23.2% of shares of all “Closed End Funds” companies are owned by institutional investors. 7.1% of Prospect Capital Corporation shares are owned by insiders. Comparatively, 4.5% of shares of all “Closed End Funds” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Prospect Capital Corporation and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Prospect Capital Corporation 36.08% 8.98% 4.94%
Prospect Capital Corporation Competitors -87.43% 6.60% 5.04%

Analyst Recommendations

This is a breakdown of recent ratings for Prospect Capital Corporation and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prospect Capital Corporation 1 3 0 0 1.75
Prospect Capital Corporation Competitors 197 1206 1421 14 2.44

Prospect Capital Corporation presently has a consensus target price of $6.83, suggesting a potential upside of 13.51%. As a group, “Closed End Funds” companies have a potential upside of 49.97%. Given Prospect Capital Corporation’s peers stronger consensus rating and higher probable upside, analysts plainly believe Prospect Capital Corporation has less favorable growth aspects than its peers.

Earnings and Valuation

This table compares Prospect Capital Corporation and its peers revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Prospect Capital Corporation N/A N/A 8.60
Prospect Capital Corporation Competitors $57.16 million $38.88 million 0.18

Prospect Capital Corporation’s peers have higher revenue and earnings than Prospect Capital Corporation. Prospect Capital Corporation is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Summary

Prospect Capital Corporation peers beat Prospect Capital Corporation on 9 of the 14 factors compared.

Prospect Capital Corporation Company Profile

Prospect Capital Corporation is a financial services company. The Company primarily lends to and invests in middle market privately held companies. The Company is a closed-end investment company. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. The Company invests primarily in senior and subordinated debt and equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes. The Company makes investments, including lending in private equity sponsored transactions, lending directly to companies not owned by private equity firms, control investments in corporate operating companies, control investments in financial companies, investments in structured credit, real estate investments, investments in syndicated debt, aircraft leasing and online lending. The Company is managed by its investment advisor, Prospect Capital Management L.P.

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