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Prospect Capital (PSEC) Q1 Earnings In Line, Costs Down Y/Y

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Prospect Capital Corporation’s (PSEC - Free Report) first-quarter fiscal 2020 (ended Sep 30) net investment income of 19 cents per share came in line with the Zacks Consensus Estimate.  The bottom-line figure decreased 17.4%, year over year.

Results benefited from lower expenses. However, decline in value of investment portfolio and lower total investment incomes were the undermining factors.

Net investment income came in at $71.1 million, down 16.6% from the prior-year quarter.

Total Investment Income & Expenses Fall

Total investment income was $161.9 million, down 10.3% year over year. Also, the figure lagged the Zacks Consensus Estimate of $163 million. This downside mainly resulted from lower dividend income and fall in interest income.

Total operating expenses decreased 4.7% to $90.8 million, on a year-over-year basis.

Total Portfolio Value & Originations

The fair value of Prospect Capital’s total investment portfolio was $5.5 billion as of Sep 30, 2019, down 3.6% sequentially.

The company originated $94.5 million in new and follow-on investments, in the period under consideration.

Balance Sheet

As of Sep 30, 2019, Prospect Capital’s net asset value was $8.87 per share compared with $9.39 as of Sep 30, 2018. Further, the company held $4 billion of unencumbered assets as of the same date.

At the end of the quarter, net of cash debt to equity ratio was 66.3%, down from 75.1% as of Sep 30, 2018.

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, fall in total investment income and value of investment portfolio continues to thwart the company’s performance.

Prospect Capital Corporation Price, Consensus and EPS Surprise

 

Prospect Capital Corporation Price, Consensus and EPS Surprise

Prospect Capital Corporation price-consensus-eps-surprise-chart | 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

Ares Capital Corporation’s (ARCC - Free Report) third-quarter 2019 core earnings of 48 cents per share surpassed the Zacks Consensus Estimate of 46 cents. Also, the bottom line rose 6.7% from the year-ago quarter.

Hercules Capital Inc.’s (HTGC - Free Report) third-quarter 2019 net investment income of 37 cents per share outpaced the Zacks Consensus Estimate of 34 cents. The bottom line grew 19.4% from the year-ago figure.

Credit Acceptance Corporation’s (CACC - Free Report) third-quarter 2019 earnings of $8.73 per share missed the Zacks Consensus Estimate of $9.13. Nonetheless, the bottom line was up 12.6% year over year. Notably, the figure included certain non-recurring items.

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