Prospect Capital Intrinsic Value – Explore the Potential of Prospect Capital: Yielding Over 10% and Trading Below NAV!
August 3, 2023
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Investors looking for a high-yielding investment opportunity should consider Prospect Capital ($NASDAQ:PSEC) (PSEC), a specialty finance company that is currently trading below its net asset value. Prospect Capital provides an attractive yield of more than 10%, making it an ideal option for income-oriented investors. Furthermore, our analysis of PSEC reveals that the company is becoming increasingly shareholder-friendly, with recent actions to reduce its leverage, increase distributions, and improve shareholder communication. Its portfolio holdings consist of a variety of investments, including middle market companies, energy projects, infrastructure investments, and real estate-related loans. The company also manages a variety of direct lending products and has a number of strategic relationships with large financial institutions. With its strong dividend yield and attractive NAV, Prospect Capital is an attractive option for income-seeking investors.
Additionally, its commitment to increasing distributions and improving communication with shareholders suggest that Prospect Capital is on track to continue providing investors with a strong return on their investments. At its current trading price of less than net asset value, Prospect Capital is an attractive option for investors seeking a high yield investment with potential for future appreciation. With its strong dividend yield and expanding portfolio of investments, Prospect Capital presents an ideal opportunity for income-oriented investors.
Dividends
Investors looking for high yielding stocks should consider Prospect Capital, which has been trading below its net asset value (NAV) and has yielded over 10% in the last three years. The annual dividend per share has been 0.72 USD throughout this period. Looking ahead to 2021 through 2023, dividend yields are projected to be 8.13%, 9.23%, 9.47%, respectively, with an average dividend yield of 8.94%. Given the relatively high yield, consistent dividends, and discount to NAV, Prospect Capital is an attractive option for those seeking dividend stocks.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Prospect Capital. More…
| Total Revenues | Net Income | Net Margin |
| -106.98 | -215.17 | 146.4% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Prospect Capital. More…
| Operations | Investing | Financing |
| -306.86 | – | 335.55 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Prospect Capital. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 7.7k | 3.9k | 9.49 |
Key Ratios Snapshot
Some of the financial key ratios for Prospect Capital are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 50.4% | – | – |
| FCF Margin | ROE | ROA |
| 286.8% | -2.5% | -1.3% |
Analysis – Prospect Capital Intrinsic Value
At GoodWhale, we recently conducted an analysis of PROSPECT CAPITAL‘s wellbeing. Using our proprietary Valuation Line, we have determined that the fair value of PROSPECT CAPITAL shares is around $7.3. At the moment, the PROSPECT CAPITAL stock is being traded at $6.5, which is a fairly priced yet undervalued stock, with a discount of 11.2%. For investors looking for a good deal, this might be a great opportunity to consider. More…
Peers
The company was founded in 1988 and is headquartered in New York, NY. As of December 31, 2018, Prospect Capital had $6.8 billion of assets under management. Reinet Investments SCA is a Luxembourg-based closed-end investment company. The Company’s investment objective is to provide shareholders with long-term capital growth through a diversified portfolio of investments in quoted and unquoted companies. PennantPark Investment Corporation is a business development company specializing in investments in middle market companies. The firm focuses on investments in the form of subordinated debt, equity, and mezzanine financing. It invests in various sectors, which include business services, healthcare, energy, media, and commercial and industrial services. The firm was founded in 2007 and is headquartered in New York, New York. Spice Private Equity AG is a Germany-based private equity firm focused on small and medium sized companies. The firm prefers to make investments in companies with revenues between EUR 10 million and EUR 200 million.
– Reinet Investments SCA ($LTS:0JR9)
Reinet Investments SCA is a publicly traded company with a market capitalization of 2.91 billion as of 2022. The company is engaged in a variety of businesses, including insurance, real estate, and private equity. It is headquartered in Luxembourg.
Summary
Prospect Capital (PSEC) is a great dividend income option for investors, currently offering a yield of over 10%. Despite some recent volatility, the company has enjoyed strong performance and continues to be shareholder-friendly. Analysis of the stock shows that it is trading below its Net Asset Value (NAV), presenting a potential opportunity for value investors. The company has a strong balance sheet and has been able to maintain steady profitability over the years.
It also has an attractive dividend policy that enables investors to benefit from steady cash flows. There may be some risk associated with this stock, but overall it is an attractive option for dividend income investors.
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