Head to Head Comparison: Prospect Capital (PSEC) versus Its Rivals

Prospect Capital (NASDAQ:PSEC) is one of 1,743 publicly-traded companies in the “Capital Markets” industry, but how does it weigh in compared to its peers? We will compare Prospect Capital to similar businesses based on the strength of its dividends, earnings, risk, profitability, valuation, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations for Prospect Capital and its peers, as reported 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	5566	20161	22510	642	2.37

Prospect Capital currently has a consensus price target of $1.50, suggesting a potential downside of 0.33%. As a group, “Capital Markets” companies have a potential upside of 24.63%. Given Prospect Capital’s peers stronger consensus rating and higher possible upside, analysts clearly believe Prospect Capital has less favorable growth aspects than its peers.

Institutional and Insider 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, 12.9% 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 stock will outperform the market over the long term.

Volatility and Risk

Prospect Capital has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Prospect Capital’s peers have a beta of 0.79, suggesting that their average stock price is 21% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prospect Capital	3.80%	13.19%	6.02%
Prospect Capital Competitors	318.48%	79.19%	3.72%

Dividends

Prospect Capital pays an annual dividend of $0.42 per share and has a dividend yield of 27.9%. 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 peers, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Prospect Capital and its peers gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Prospect Capital	$639.45 million	$153.66 million	-10.03
Prospect Capital Competitors	$2.39 billion	$398.52 million	17.33

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

Summary

Prospect Capital peers beat Prospect Capital on 10 of the 15 factors compared.

About Prospect Capital

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.