Analyzing Prospect Capital (PSEC) & Its Rivals

Prospect Capital (NASDAQ:PSEC) is one of 1,746 public companies in the “Capital Markets” industry, but how does it compare to its rivals? We will compare Prospect Capital to similar companies based on the strength of its dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Earnings & Valuation

This table compares Prospect Capital and its rivals top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Prospect Capital	$639.45 million	$153.66 million	-9.73
Prospect Capital Competitors	$5.20 billion	$397.48 million	15.07

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

Dividends

Prospect Capital pays an annual dividend of $0.42 per share and has a dividend yield of 28.8%. Prospect Capital pays out -280.0% of its earnings in the form of a dividend. As a group, “Capital Markets” companies pay a dividend yield of 3.2% and pay out 29.2% of their earnings in the form of a dividend. Prospect Capital is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prospect Capital	2	1	0	0	1.33
Prospect Capital Competitors	5623	20221	22578	651	2.37

Prospect Capital presently has a consensus target price of $1.50, suggesting a potential upside of 2.74%. As a group, “Capital Markets” companies have a potential upside of 23.44%. Given Prospect Capital’s rivals stronger consensus rating and higher probable upside, analysts plainly believe Prospect Capital has less favorable growth aspects than its rivals.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prospect Capital	3.80%	13.28%	6.12%
Prospect Capital Competitors	314.70%	9.80%	3.42%

Insider & Institutional Ownership

9.1% of Prospect Capital shares are owned by institutional investors. Comparatively, 30.6% of shares of all “Capital Markets” companies are owned by institutional investors. 25.9% of Prospect Capital shares are owned by company insiders. Comparatively, 13.1% of shares of all “Capital Markets” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Prospect Capital has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, Prospect Capital’s rivals have a beta of 0.81, meaning that their average share price is 19% less volatile than the S&P 500.

Summary

Prospect Capital rivals beat Prospect Capital on 9 of the 15 factors compared.

Prospect Capital Company Profile

Prospect Capital Corporation is a business development company that provides financing to middle-market businesses. Its investments include senior and subordinated debt, structured finance, and equity securities. The company works with businesses seeking capital for purposes such as growth, acquisitions, recapitalizations, and refinancing. Its portfolio spans a range of industries, with investments primarily in companies in the United States. Founded in 2004, Prospect Capital is externally managed by Prospect Capital Management L.P. and is headquartered in New York City.