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Prospect Capital (PSEC) Q4 Earnings Improve Y/Y, Costs Down

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Prospect Capital’s (PSEC - Free Report) fourth-quarter fiscal 2021 (ended Jun 30) net investment income of 19 cents per share was up 18.8% year over year. The bottom line matched the Zacks Consensus Estimate.

Results were aided by a rise in total investment income and lower expenses. Further, overall portfolio activity remained decent in the reported quarter with strong originations.

Net investment income came in at $73.2 million, up 25.7% from the prior-year quarter.

In fiscal 2021, net investment income was $285.7 million or 75 cents per share, up from $265.7 million or 72 cents per share a year ago.

Total Investment Income Climbs, Expenses Down

Total investment income was $157.3 million, up 8.3% year over year. The rise resulted from higher interest income, dividend income and other income.

In fiscal 2021, total investment income grew 1.4% to $632 million.

Total operating expenses declined 3.3% from the prior-year quarter to $84.1 million.

Total Portfolio Value & Originations Decent

The fair value of Prospect Capital’s total investment portfolio was $6.2 billion as of Jun 30, 2021, up 18.5% from the previous-year quarter.

In the reported quarter, the company recorded $306.8 million of total originations, while repayments were $156.3 million.

Strong Balance-Sheet Position

As of Jun 30, 2021, Prospect Capital’s net asset value was $9.81 per share compared with $8.18 on Jun 30, 2020. The company had $4.5 billion of unencumbered assets as of the same date.

At the end of the reported quarter, net of cash debt to equity ratio was 55.9%, down from 69.6% as of Jun 30, 2020.

Our Take

Solid loan origination activity continues to be on track and this is expected to support Prospect Capital’s financials.

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 2021 net investment income of 32 cents per share was in line with the Zacks Consensus Estimate. The figure indicates no change from the year-ago quarter’s reported number.

Ares Capital Corporation’s (ARCC - Free Report) second-quarter 2021 core earnings of 53 cents per share surpassed the Zacks Consensus Estimate of 43 cents. Moreover, the bottom line reflects a rise of 35.9% from the prior-year quarter’s reported number.

FS KKR Capital Corp.’s (FSK - Free Report) second-quarter 2021 adjusted net investment income per share of 74 cents surpassed the Zacks Consensus Estimate of 61 cents. In the prior-year quarter, the company reported earnings of 62 cents. The reported quarter’s results exclude accretion resulting from the merger with FS KKR Capital Corp. II.