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Prospect Capital (PSEC) Q1 Earnings In Line, Costs Down Y/Y

Published 11/06/2019, 09:38 PM
Updated 07/09/2023, 06:31 AM
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Prospect Capital Corporation’s (NASDAQ:PSEC) first-quarter fiscal 2020 (ended Sep 30) net investment income of 19 cents per share came in line with the Zacks Consensus Estimate. The bottom-line figure decreased 17.4%, year over year.

Results benefited from lower expenses. However, decline in value of investment portfolio and lower total investment incomes were the undermining factors.

Net investment income came in at $71.1 million, down 16.6% from the prior-year quarter.

Total Investment Income & Expenses Fall

Total investment income was $161.9 million, down 10.3% year over year. Also, the figure lagged the Zacks Consensus Estimate of $163 million. This downside mainly resulted from lower dividend income and fall in interest income.

Total operating expenses decreased 4.7% to $90.8 million, on a year-over-year basis.

Total Portfolio Value & Originations

The fair value of Prospect Capital’s total investment portfolio was $5.5 billion as of Sep 30, 2019, down 3.6% sequentially.

The company originated $94.5 million in new and follow-on investments, in the period under consideration.

Balance Sheet

As of Sep 30, 2019, Prospect Capital’s net asset value was $8.87 per share compared with $9.39 as of Sep 30, 2018. Further, the company held $4 billion of unencumbered assets as of the same date.

At the end of the quarter, net of cash debt to equity ratio was 66.3%, down from 75.1% as of Sep 30, 2018.

Our Take

Prospect Capital’s loan origination activity continues to be on track and it strategically deploys its capital while maintaining a balanced and diversified approach across various industries and sectors. However, fall in total investment income and value of investment portfolio continues to thwart the company’s performance.

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Currently, Prospect Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

Ares Capital Corporation’s (NASDAQ:ARCC) third-quarter 2019 core earnings of 48 cents per share surpassed the Zacks Consensus Estimate of 46 cents. Also, the bottom line rose 6.7% from the year-ago quarter.

Hercules Capital Inc.’s (NYSE:HTGC) third-quarter 2019 net investment income of 37 cents per share outpaced the Zacks Consensus Estimate of 34 cents. The bottom line grew 19.4% from the year-ago figure.

Credit Acceptance Corporation’s (NASDAQ:CACC) third-quarter 2019 earnings of $8.73 per share missed the Zacks Consensus Estimate of $9.13. Nonetheless, the bottom line was up 12.6% year over year. Notably, the figure included certain non-recurring items.

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Credit Acceptance Corporation (CACC): Free Stock Analysis Report

Prospect Capital Corporation (PSEC): Free Stock Analysis Report

Hercules Capital, Inc. (HTGC): Free Stock Analysis Report

Ares Capital Corporation (ARCC): Free Stock Analysis Report

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