Prospect Capital Corp (PSEC)

Price$1.72Cached quoteAs of 2026-10-11 01:17 UTC

AI: Undervalued

Price checkThe shares look undervalued, but the discount reflects real losses and repeated dilution.

At the observed market value, shares trade at about 39% of June’s $5.71 net asset value, meaning investors pay roughly 39 cents for each dollar of reported common assets. The price is also about 4.8 times fiscal 2026 investment income left after preferred dividends: $0.68 per share minus $0.22. The current $0.42 annual payout implies a yield near 19%. Further write-downs and dilution are plausible, but the 61% asset discount looks excessive if erosion slows.

Big pictureCurrent income narrowly supports the payout, while revenue and asset value keep falling.

Fiscal 2026 revenue fell to $639.5 million from $861.7 million in 2024, while net investment income was $326.4 million, down 3.7% from 2025. Net investment income is investment profit after operating costs but before preferred-holder claims. After preferred dividends, roughly $0.46 per common share remained, only about 10% above the current $0.42 annual payout. Reported operating cash inflow was $516.3 million, but lender cash flows vary with loan activity. Net income’s swing from a $469.9 million loss to a $153.7 million profit illustrates valuation cyclicality.

Business strengthLower debt and safer loans improve resilience, but common shareholder value keeps shrinking.

Debt fell from $2.43 billion to $1.86 billion between fiscal 2024 and 2026. Cash was only $43.6 million, although cash plus unused revolving-credit capacity totaled $1.60 billion. Net debt equaled 28.6% of assets, and investment income covered interest expense 3.66 times. First-lien loans, which have the first claim on collateral, reached 72.5% of investments at cost. However, troubled non-paying loans rose from 0.3% to 0.7% of assets, and $1.57 billion of preferred stock ranks ahead of common shareholders.

What could change the storyStable asset value would unlock upside, while continued dilution could erase the apparent bargain.

The bull case needs at least two quarters of stable asset value and common-available income at least 10% above distributions; even rerating from 39% to 60% of reported asset value would lift market value by over half. The bear case is continued dilution: shares rose from 424.8 million to 512.7 million in two years while common equity fell from $3.71 billion to $2.93 billion. Common-stock transactions reduced asset value by $0.41 per share in 2026, while buybacks were only $10.9 million. Below-value sales and discounted dividend shares could extend that erosion.

AI: News

Year-end results expose erosionYear-end results showed steady lending income, another asset-value drop, and an unchanged monthly payout.

On August 20, Prospect reported fiscal fourth-quarter net investment income—investment profit after operating costs—of $77.7 million, or $0.15 per share. Net asset value fell to $5.71 per share from $6.05 in March, while common shareholders recorded a $38.1 million loss. Management maintained monthly distributions of $0.035 through October. Shares gained about 2.2% in the next session, but timing alone does not prove the results caused that move.

Valley Electric sale closesA successful portfolio-company sale produced substantial cash for debt reduction and demonstrated realizable asset value.

Prospect completed the Valley Electric sale on July 1 for approximately $328 million of total consideration, subject to adjustments. Expected net proceeds were about $281 million, and the company reported a 4.8-times multiple on invested capital and a 20.5% annualized gross return since 2012. Applying the cash to the revolving credit line would have reduced its June draw from $562.3 million to about $322.7 million. The transaction strengthens liquidity, although it also removes the sold investment’s future income.

Below-value sales approvedShareholders renewed flexible funding authority, but future issuance could further dilute common owners.

At the July 7 special meeting, shareholders authorized Prospect for another twelve months to sell common shares below reported net asset value with board approval. Shares sold on any given date cannot exceed 25% of the previously outstanding common shares. Excluding affiliate-owned votes, approximately 146.0 million votes supported the proposal and 63.9 million opposed it. The filing announced no actual sale, but the authority matters because issuing discounted shares divides common asset value among more owners.

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Revenue

2021

2022

2023

2024

2025

2026

Net income

2020

2021

2022

2023

2024

2025

2026

Free cash flow

No reported data

Total cash / debt

CashTotal debt

2020

2021

2022

2023

2024

2025

2026

Financial statements

	2026	2025 · Aug 31	2025 · Jun 30	2024 · Aug 31	2024 · Jun 30	2023 · Aug 31	2023 · Jun 30	2022 · Aug 31	2022 · Jun 30	2021 · Aug 31	2021 · Jun 30	2020 · Aug 31	2020 · Jun 30	2019
Revenue	$639.5M	—	$719.4M	—	$861.7M	—	$852.2M	—	$710.9M	—	$632.0M	—	—	—
Operating expenses	$39.8M	—	$63.0M	—	$44.3M	—	$40.7M	—	—	—	—	—	—	—
Net income	$153.7M	−$490.5M	−$469.9M	$234.1M	$262.8M	−$88.0M	−$101.6M	$735.3M	$582.6M	$428.1M	$963.8M	−$78.9M	—	—
Net profit margin	24.03%	—	−65.32%	—	30.50%	—	−11.93%	—	81.95%	—	152.51%	—	—	—
Basic EPSper basic share	$0.06	—	-$1.35	—	$0.36	—	-$0.43	—	$1.43	—	$2.51	—	—	—
Diluted EPSper diluted share	$0.06	—	-$1.35	—	$0.34	—	-$0.43	—	$1.34	—	$2.50	—	—	—

Review official source filings ↗

Owners

Reported shareholders

Reference date Jun 30, 2026

≈17.48%of listed shares

Barry John F89.65M shares · Jun 23, 2026

View holders

Top 20 reported holders of PSEC
Holder	% owned
Barry John F	≈17.48%89.65M shares
PRIVATE MANAGEMENT GROUP INC	4.00%20.53M shares
TWO SIGMA INVESTMENTS, LP	2.75%14.08M shares
VAN ECK ASSOCIATES CORP	1.89%9.69M shares
UBS Group AG	1.29%6.63M shares
Legal & General Group Plc	0.79%4.03M shares
GENDELL JEFFREY L	0.78%4.01M shares
Eliasek M Grier	≈0.67%3.44M shares
MARSHALL WACE, LLP	0.60%3.07M shares
MORGAN STANLEY	0.52%2.69M shares
INDEPENDENT FINANCIAL GROUP, LLC	0.48%2.49M shares
SUSQUEHANNA INTERNATIONAL GROUP, LLP	0.44%2.25M shares
BlackRock, Inc.	0.28%1.44M shares
GraniteShares Advisors LLC	0.21%1.09M shares
LPL Financial LLC	0.18%919.56K shares
COMMONWEALTH EQUITY SERVICES, LLC	0.15%762.76K shares
Cambridge Investment Research Advisors, Inc.	0.14%732.6K shares
TUDOR INVESTMENT CORP ET AL	0.14%709.3K shares
Naviter Wealth, LLC	0.13%656.53K shares
CAXTON ASSOCIATES LLP	0.12%592.55K shares

Percentages use 512.75M shares of this listed class outstanding on Jun 30, 2026. ≈ compares the latest reported holding with a share total from a different date; it is not a confirmed current stake.

Gray completes the 100% scale. Reported positions may overlap; holders have different reporting dates.

Source: SEC Form 4 ↗Updated Sep 29, 2026 · Quarterly data

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys77$100.88M disclosed value

Sells (SEC code S)0$0.00 disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 23, 2026Form 4	Barry John FCHIEF EXECUTIVE OFFICER	BuyCOMMON STOCK	67.6K	$2.27	$153.6K	89.21M
Jun 23, 2026Form 4	Barry John FCHIEF EXECUTIVE OFFICER	BuyCOMMON STOCK	1.00M	$2.27	$2.27M	89.15M
Jun 22, 2026Form 4	Barry John FCHIEF EXECUTIVE OFFICER	BuyCOMMON STOCK	1.00M	$2.25	$2.25M	88.15M
May 26, 2026Form 4	Barry John FCHIEF EXECUTIVE OFFICER	BuyCOMMON STOCK	3.0K	$2.33	$7.0K	87.12M
May 26, 2026Form 4	Barry John FCHIEF EXECUTIVE OFFICER	BuyCOMMON STOCK	430.0K	$2.32	$997.6K	87.12M