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Prospect Capital (PSEC) Q4 Earnings Beat on Higher Revenues
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Prospect Capital Corporation’s (PSEC - Free Report) fourth-quarter fiscal 2018 (ended Jun 30) net investment income of 22 cents per share beat the Zacks Consensus Estimate of 20 cents. Also, the bottom line increased 15.8% year over year.
Results reflected higher revenues, a rise in net asset value and a decline in operating expenses. However, fall in investment portfolio was an undermining factor.
Net investment incomefor the reported quarter came in at $79.5 million, up 14.1% from the prior-year quarter.
For fiscal 2018, net investment income was $286.9 million or 79 cents per share, down from $306.1 million or 85 cents per share in fiscal 2017.
Total Investment Income Improves, Expenses Fall
Total investment income for the quarter was $174 million, up 4.4% from the year-ago period. The increase was mainly driven by higher dividend income. Also, the figure surpassed the Zacks Consensus Estimate of $162.4 million.
Total investment income for fiscal 2018 declined 6.2% year over year to $657.8 million. However, it beat the Zacks Consensus Estimate of $646.2 million.
Total operating expenses fell 2.5% year over year to $94.6 million. The decrease was largely due to lowerinterest and credit facility expenses, and other general and administrative expenses.
Total Portfolio Value & Originations
The fair value of Prospect Capital’s total investment portfolio was $5.73 billion as of Jun 30, 2018, down 1.9% year over year.
In the reported quarter, the company originated $339.8 million in new and follow-on investments.
Balance Sheet
As of Jun 30, 2018, Prospect Capital’s net asset value was $9.35 per share compared with $9.32 as of Jun 30, 2017. Further, the company held $4.5 billion of unencumbered assets as on the same date.
At the end of the reported quarter, net of cash debt to equity ratio was 66.5%, down from 70.5% as of Jun 30, 2017.
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, elevated expense levels are expected to hurt the bottom line to some extent.
Prospect Capital Corporation Price, Consensus and EPS Surprise
Hercules Capital, Inc.’s (HTGC - Free Report) second-quarter 2018 adjusted net investment income of 29 cents per share beat the Zacks Consensus Estimate by a penny. Results reflected higher revenues, growth in investment portfolio and a rise in net asset value. However, increase in operating expenses was an undermining factor.
Ares Capital Corporation’s (ARCC - Free Report) second-quarter 2018 core earnings of 39 cents per share were in line with the Zacks Consensus Estimate. Results reflected improved total investment income and healthy portfolio activity. However, an increase in expenses was the undermining factor.
LendingClub Corporation (LC - Free Report) reported second-quarter 2018 adjusted loss per share of 2 cents, which is narrower than the Zacks Consensus Estimate of a loss of 4 cents. The company’s results primarily benefited from higher revenues and rise in loan originations. However, a decline in loan balance and a rise in operating expenses were the major headwinds.
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Prospect Capital (PSEC) Q4 Earnings Beat on Higher Revenues
Prospect Capital Corporation’s (PSEC - Free Report) fourth-quarter fiscal 2018 (ended Jun 30) net investment income of 22 cents per share beat the Zacks Consensus Estimate of 20 cents. Also, the bottom line increased 15.8% year over year.
Results reflected higher revenues, a rise in net asset value and a decline in operating expenses. However, fall in investment portfolio was an undermining factor.
Net investment incomefor the reported quarter came in at $79.5 million, up 14.1% from the prior-year quarter.
For fiscal 2018, net investment income was $286.9 million or 79 cents per share, down from $306.1 million or 85 cents per share in fiscal 2017.
Total Investment Income Improves, Expenses Fall
Total investment income for the quarter was $174 million, up 4.4% from the year-ago period. The increase was mainly driven by higher dividend income. Also, the figure surpassed the Zacks Consensus Estimate of $162.4 million.
Total investment income for fiscal 2018 declined 6.2% year over year to $657.8 million. However, it beat the Zacks Consensus Estimate of $646.2 million.
Total operating expenses fell 2.5% year over year to $94.6 million. The decrease was largely due to lowerinterest and credit facility expenses, and other general and administrative expenses.
Total Portfolio Value & Originations
The fair value of Prospect Capital’s total investment portfolio was $5.73 billion as of Jun 30, 2018, down 1.9% year over year.
In the reported quarter, the company originated $339.8 million in new and follow-on investments.
Balance Sheet
As of Jun 30, 2018, Prospect Capital’s net asset value was $9.35 per share compared with $9.32 as of Jun 30, 2017. Further, the company held $4.5 billion of unencumbered assets as on the same date.
At the end of the reported quarter, net of cash debt to equity ratio was 66.5%, down from 70.5% as of Jun 30, 2017.
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, elevated expense levels are expected to hurt the bottom line to some extent.
Prospect Capital Corporation Price, Consensus and EPS Surprise
Prospect Capital Corporation Price, Consensus and EPS Surprise | Prospect Capital Corporation Quote
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
Hercules Capital, Inc.’s (HTGC - Free Report) second-quarter 2018 adjusted net investment income of 29 cents per share beat the Zacks Consensus Estimate by a penny. Results reflected higher revenues, growth in investment portfolio and a rise in net asset value. However, increase in operating expenses was an undermining factor.
Ares Capital Corporation’s (ARCC - Free Report) second-quarter 2018 core earnings of 39 cents per share were in line with the Zacks Consensus Estimate. Results reflected improved total investment income and healthy portfolio activity. However, an increase in expenses was the undermining factor.
LendingClub Corporation (LC - Free Report) reported second-quarter 2018 adjusted loss per share of 2 cents, which is narrower than the Zacks Consensus Estimate of a loss of 4 cents. The company’s results primarily benefited from higher revenues and rise in loan originations. However, a decline in loan balance and a rise in operating expenses were the major headwinds.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>