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Prospect Capital (PSEC) Q1 Earnings Beat Estimates, Stock Up

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Shares of Prospect Capital (PSEC - Free Report) have rallied 6.9% since the announcement of robust first-quarter fiscal 2022 (ended Sep 30) results earlier this week. Net investment income of 21 cents per share surpassed the Zacks Consensus Estimate of 18 cents. The bottom line surged 40% year over year.

Results were aided by a rise in total investment income. Further, the overall portfolio activity remained decent in the reported quarter with strong originations. However, higher operating expenses posed a concern.

Net investment income came in at $81.4 million, up 41.4% from the prior-year quarter.

Total Investment Income Climbs, Expenses Up

Total investment income was $169.5 million, up 18.6% year over year. The rise resulted from higher interest income, dividend income, and other income.

Total operating expenses rose 3.2% from the prior-year quarter to $88.1 million.

Total Portfolio Value & Originations Decent

The fair value of Prospect Capital’s total investment portfolio was $6.43 billion as of Sep 30, 2021, up 3.7% from the previous quarter.

In the reported quarter, the company recorded $424.7 million of total originations while repayments were $324 million.

Strong Balance-Sheet Position

As of Sep 30, 2021, Prospect Capital’s net asset value was $10.12 per share compared with $8.40 on Sep 30, 2020. The company had $4.61 billion of unencumbered assets as of the same date.

At the end of the reported quarter, net of cash debt to equity ratio was 48.2%, down from 69.8% as of Sep 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) third-quarter 2021 net investment income of 33 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line was 2.9% down from the year-ago quarter figure.

Ares Capital Corporation’s (ARCC - Free Report) third-quarter 2021 core earnings of 47 cents per share beat the Zacks Consensus Estimate of 45 cents. The bottom line reflected a rise of 20.5% from the prior-year quarter.

TriplePoint Venture Growth BDC Corp.’s (TPVG - Free Report) third-quarter 2021 net investment income was 32 cents per share, missing the Zacks Consensus Estimate of 35 cents. The bottom line also declined 20% from the year-ago quarter.