Prospect Capital Corporation offers extreme value at 6.6x forward earnings with a 4-for-4 beat streak and 17.6% free cash flow yield, but is in a confirmed price downtrend with a 1.4%/month declining 200-day moving average slope and faces negative revenue growth of -12%, making the setup a deep value trap risk.
Thesis pillars
- Revenue Declining Negative Growth→Stable
- Deep Value Beat Streak→Stable
- Confirmed Price Downtrend↓Deteriorating
- +1 more pillar — see the Why tab for full reasoning
Pillars as of Jul 3, 2026, based on the 10-K filed Aug 20, 2026· older than 90 days
Prospect Capital Corporation (PSEC) Stock Analysis
Inst Constrain edge
Financial Services · Asset Management
Hold if already holding. Not a fresh buy at $1.44, but acceptable to hold if already in. Reasons: Weak growth; Below 200-MA, MA slope -3.5%/30d (confirmed downtrend).
Prospect Capital is an externally managed, non-diversified business development company that lends mainly to privately held U.S. middle-market companies through senior secured first lien loans, plus second lien, equity and some real estate investments. It held about $6.4 billion... Read more
Hold if already holding. Not a fresh buy at $1.44, but acceptable to hold if already in. Reasons: Weak growth; Below 200-MA, MA slope -3.5%/30d (confirmed downtrend). Chart setup: No clear chart pattern; technical signals are mixed. Maintain position. Not compelling to add more. Score 5.7/10, moderate confidence.
Passes 6/8 gates (favorable risk/reward ratio, clean insider activity, no SEC red flags, earnings proximity no date, semi cycle peak clear, materials cycle peak clear). Fails on weak momentum and death cross (50MA < 200MA). Suitability: speculative.
About Prospect Capital Corporation
About Prospect Capital Corporation
Prospect Capital, a business development company incorporated in Maryland, held about $6.4 billion of total assets as of June 30, 2026 and lends primarily to privately held U.S. middle market companies with annual revenues below $750 million and enterprise values below $1 billion. Its portfolio spans 31 industry categories, and excluding collateralized loan obligation investments, no individual industry exceeds 18.1% of the portfolio on a cost or fair value basis.
The company is externally managed by Prospect Capital Management, which receives a base management fee of 2.00% of total assets, an income incentive fee that begins once pre-incentive net investment income exceeds a 1.75% quarterly hurdle (7.00% annualized), and a capital gains incentive fee equal to 20.00% of realized capital gains net of losses and unrealized depreciation. Most investments are senior and secured first lien loans, typically below $250 million, supplemented by second lien loans, equity and equity-linked securities, and a smaller allocation to real estate holdings through National Property REIT Corp. The company funds itself with unsecured notes, including $264.5 million of 3.364% notes due 2026, $654.7 million of 3.437% notes due 2028 and $182.2 million of 5.50% notes due 2030, plus a revolving credit facility with a final maturity in June 2029. As a BDC it must keep asset coverage of at least 150% after borrowing or issuing preferred stock.
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Adviser dependence and capital access frame the risk. The Investment Advisory Agreement was re-approved on June 18, 2026 for a term ending June 21, 2027, yet either party may end it without penalty on not more than 60 days' written notice, and the filing says future success depends to a significant extent on John F. Barry III and M. Grier Eliasek, with Mr. Barry controlling the adviser. Shares trade at a discount to net asset value, and stockholder approval to sell shares below NAV runs only until July 7, 2027, which may constrain equity raising. If market conditions made it hard to refinance the 2026 notes, the company could face higher funding costs or have to curtail new commitments.
See also: Financial Services · Asset Management
From Prospect Capital Corporation's most recent 10-K filing, extracted October 18, 2026.
Recent developments
updated Oct 29, 2026Recent Developments — Prospect Capital Corporation
Latest news
- NEWS Prospect Capital priced $300M institutional offering of senior unsecured notes - TradingView — TradingView Oct 29, 2026 neutral
- NEWS Prospect Capital Corporation Announces Pricing of $300 Million Institutional Offering of 8.95% Unsecured Notes due 2031 — www.marketscreener.com Oct 29, 2026 neutral
- NEWS Prospect Capital: Upgrading The Preferred Shares To 'Hold' As Yield Realignment Completes - Seeking Alpha — Seeking Alpha Oct 29, 2026 positive
- NEWS Prospect Capital Corp's Dividend Analysis - Yahoo Finance — Yahoo Finance Oct 28, 2026 neutral
- NEWS Prospect Capital reports preliminary Q3 2026 financial estimates - Investing.com — Investing.com Oct 27, 2026 neutral
Latest item Oct 29, 2026 · Generated 2026-11-05T11:44:09Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- MEDIUMcounterpartyInvestment Adviser senior management10-K Item 1: 'Our future success depends to a significant extent on the continued service of the senior management team, particularly John F. Barry III and M. Grier Eliasek.'
- MEDIUMloan_portfoliolimited number of portfolio companies10-K Item 1A: 'Our portfolio contains a limited number of portfolio companies, some of which comprise a substantial percentage of our portfolio'
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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Rating Breakdown
1 floor-breaker·1 ceiling hit
Revenue shrinking — -6.7% YoY. Growth thesis broken unless recovery story develops.static
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Hold if already holding. Not a fresh buy at $1.44, but acceptable to hold if already in. Reasons: Weak growth; Below 200-MA, MA slope -3.5%/30d (confirmed downtrend). Chart setup: No clear chart pattern; technical signals are mixed. Maintain position. Not compelling to add more. Analyst target $1.70 (+18.1%), stop $1.36 (−5.9%), A.R:R 1.5:1. Score 5.7/10, moderate confidence.
Analyst target: $1.70 (+18.1% upside). Analyst target $1.70 (+18.1%), stop $1.36 (−5.9%), A.R:R 1.5:1. Stop-loss: $1.36.
Weak growth; Below 200-MA, MA slope -3.5%/30d (confirmed downtrend).
Prospect Capital Corporation trades at a P/E of 24.0 (forward 4.1). TrendMatrix value score: 9.0/10. Verdict: Hold.
6 analysts rate PSEC, with a consensus score of 2.0/5. 1 analysts publish price targets averaging $2.
What does Prospect Capital Corporation do?Prospect Capital is an externally managed, non-diversified business development company that lends mainly to privately...
Prospect Capital is an externally managed, non-diversified business development company that lends mainly to privately held U.S. middle-market companies through senior secured first lien loans, plus second lien, equity and some real estate investments. It held about $6.4 billion of total assets as of June 30, 2026 across 31 industry categories, with no industry above 18.1%. The adviser, Prospect Capital Management, earns a 2.00% base fee plus incentive fees.