PSEC
Financial ServicesProspect Capital Corporation · Asset Management · $1B
What is Prospect Capital Corporation?
Prospect Capital Corporation is a business development company (BDC) focused on lending to and investing in middle-market private businesses across a wide range of industries. Founded in 2004 and headquartered in New York City, it operates as a publicly traded closed-end investment fund.
Prospect Capital generates income primarily by making debt and equity investments in private and microcap public companies that lack easy access to traditional capital markets. Its strategies span senior secured loans, mezzanine debt, unitranche facilities, and equity co-investments. The company also allocates a portion of its portfolio to real estate, with a focus on multi-family residential assets. Revenue flows mainly from interest income on loans and dividends or capital gains from equity positions.
Prospect Capital was founded in 2004 and is headquartered in New York City, US.
- Senior secured and first-lien loans to middle-market companies
- Mezzanine and subordinated debt financing
- Equity and co-investment positions in private businesses
- Multi-family residential real estate investments
- Secondary loan and portfolio acquisitions
Is PSEC a Good Stock to Buy?
UQS Score rates PSEC as Below Average overall, reflecting meaningful headwinds across several key quality dimensions.
The Quality pillar stands out as the relative bright spot within PSEC's profile, suggesting the underlying portfolio has some structural integrity. Valuation is rated Attractive, meaning the stock may be priced at a discount relative to its fundamentals — a consideration for income-focused investors willing to accept the trade-offs.
The Moat, Growth, and Risk pillars all register as Weak, pointing to limited competitive differentiation, constrained earnings expansion potential, and elevated balance-sheet or credit risk inherent to leveraged BDC lending.
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Past performance does not guarantee future results. UQS Score is based on fundamental data and is not a buy/sell recommendation.
Does PSEC pay dividends?
Yes — Prospect Capital Corporation pays a dividend.
Prospect Capital pays a regular dividend, which is a core feature of the BDC structure — regulations require distributing the vast majority of taxable income to shareholders. For income-seeking investors, this cadence is a primary draw. However, dividend sustainability in BDCs depends heavily on credit quality and portfolio yield, both of which carry risk in PSEC's case given its Risk pillar rating.
When does PSEC report earnings?
Prospect Capital reports earnings on a quarterly cadence, consistent with US-listed closed-end funds and BDCs.
As a BDC, PSEC's quarterly results center on net investment income, net asset value per share, and portfolio credit quality rather than traditional revenue growth metrics. Performance tends to track interest rate conditions and the health of its middle-market borrowers. Investors should monitor NAV trends alongside dividend coverage ratios.
For the most recent quarter's results and management commentary, visit Prospect Capital's investor relations page directly.
PSEC Price History
-42.0% over 5Y
Monthly close, adjusted for stock splits and dividend reinvestment.
What if I invested in Prospect Capital Corporation?
Based on Prospect Capital Corporation's historical closing prices, adjusted for stock splits and dividend reinvestment. Past performance does not guarantee future results. This is for informational purposes only and is not financial advice.
PSEC Long-term Outlook
The Growth and Risk pillars both register as Weak, suggesting the near-term fundamental outlook is cautious. BDCs like PSEC are sensitive to credit cycles — when borrowers in the middle market face stress, portfolio losses can compress net investment income and pressure NAV. The Attractive Valuation label indicates the market may already be pricing in some of these concerns, which could limit downside but also cap upside if growth remains constrained.
Growth drivers
- Elevated interest rate environment supporting loan yields on floating-rate assets
- Ongoing demand for private credit from middle-market companies underserved by banks
- Real estate portfolio providing diversification beyond pure credit exposure
Key risks
- Credit deterioration among leveraged middle-market borrowers in a slowing economy
- Dividend coverage risk if net investment income declines
- Limited competitive moat in a crowded private credit and BDC landscape
PSEC vs Peers
Prospect Capital operates in a competitive BDC and alternative credit landscape alongside several other publicly traded investment vehicles.
ASA focuses exclusively on gold and precious metals equities, offering a very different risk and return profile compared to PSEC's diversified private credit strategy.
Capital Southwest is a direct BDC peer with a similar middle-market lending focus, making it one of the most relevant benchmarks for evaluating PSEC's portfolio quality and dividend sustainability.
Strive operates as an asset management firm with a distinct investment philosophy, differing from PSEC's direct-lending and equity co-investment model.
Frequently Asked Questions
What does Prospect Capital Corporation do?
Prospect Capital is a business development company that lends to and invests in middle-market private businesses. It provides senior secured loans, mezzanine debt, and equity capital to companies that lack access to traditional bank financing. It also invests in multi-family residential real estate.
Does PSEC pay dividends?
Yes, Prospect Capital pays a regular dividend. As a BDC, it is required by regulation to distribute the majority of its taxable income to shareholders. The sustainability of that dividend depends on the performance of its loan portfolio and overall credit conditions.
When does PSEC report earnings?
Prospect Capital reports on a quarterly cadence, standard for US-listed BDCs. Key metrics to watch include net investment income and net asset value per share. For exact dates, check Prospect Capital's investor relations page.
Is PSEC a good stock to buy?
UQS Score rates PSEC as Below Average overall. While the Valuation pillar is Attractive and Quality registers as Good, the Moat, Growth, and Risk pillars are all Weak. Whether it fits your portfolio depends on your income needs and risk tolerance. View the full breakdown with a Pro account.
Is PSEC overvalued?
The UQS Valuation pillar for PSEC is rated Attractive, suggesting the stock is not expensive relative to its fundamentals. However, a low valuation in a BDC can also reflect the market pricing in credit or dividend risk — context matters when interpreting this signal.
How does PSEC compare to its competitors?
Among its listed peers, Capital Southwest (CSWC) is the closest BDC comparable. PSEC differentiates through its broad sector diversification and real estate allocation, but its Weak Moat pillar suggests it does not hold a strong structural advantage over peers in the private credit market.
What is PSEC's market cap bracket?
Prospect Capital is classified as a small-cap company. This places it below large and mega-cap financial firms, which can mean lower liquidity and greater price sensitivity to sector-wide credit events.
Who founded Prospect Capital Corporation?
Prospect Capital was founded in 2004. Founding and leadership history is publicly available through the company's official filings and investor relations materials for those seeking detailed background.
Is PSEC a long-term quality investment?
As a long-term quality indicator, PSEC's UQS profile is mixed. The Good Quality pillar offers some reassurance, but Weak scores in Moat, Growth, and Risk suggest structural challenges that long-term investors should weigh carefully. The complete analyst view is available to Pro members.
What is the main competitive advantage of Prospect Capital?
Prospect Capital's primary advantage lies in its broad origination network across middle-market lending and its diversification across industries and real estate. However, the UQS Moat pillar rates this as Weak, indicating these advantages may not be durable enough to consistently outperform peers.
What sector does PSEC belong to?
PSEC operates in the Financial Services sector, specifically as a business development company — a regulated structure that functions similarly to a closed-end fund focused on private credit and equity. BDCs are governed by the Investment Company Act of 1940.
Is PSEC a growth stock or value stock?
Based on UQS pillar labels, PSEC leans toward a value or income profile rather than growth. The Growth pillar is Weak, while Valuation is Attractive — a combination more typical of yield-oriented investments than high-growth equities.
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Pro Analysis
PSEC — Score History
| Date | UQS | Quality | Moat | Growth | Risk | Value | Change |
|---|---|---|---|---|---|---|---|
| May 18, 2026 | 39.1 | 25.0 | 10.0 | 23.5 | 71.0 | 100.0 | +3.4 |
| May 10, 2026 | 35.7 | 25.0 | 10.0 | 20.6 | 52.4 | 100.0 | -11.1 |
| May 3, 2026 | 46.8 | 75.0 | 10.0 | 30.7 | 29.5 | 100.0 | +0.1 |
| Apr 26, 2026 | 46.7 | 75.0 | 10.0 | 30.3 | 29.5 | 100.0 | -0.1 |
| Apr 22, 2026 | 46.8 | 75.0 | 10.0 | 30.7 | 29.5 | 100.0 | -1.5 |
| Apr 19, 2026 | 48.3 | 75.0 | 10.0 | 38.4 | 29.5 | 100.0 | +0.1 |
| Apr 14, 2026 | 48.2 | 75.0 | 10.0 | 37.4 | 29.5 | 100.0 | +0.1 |
| Apr 9, 2026 | 48.1 | 75.0 | 10.0 | 37.3 | 29.5 | 100.0 | -0.1 |
| Apr 4, 2026 | 48.2 | 75.0 | 10.0 | 37.4 | 29.5 | 100.0 | +0.1 |
| Apr 2, 2026 | 48.1 | 75.0 | 10.0 | 37.4 | 29.5 | 100.0 | — |
PSEC — Pillar Breakdown
Quality
— 25.0/100 (25%)Prospect Capital Corporation currently shows below-average quality metrics, suggesting challenges with profitability.
Profitability relative to shareholders' equity.
Ability to convert revenue into operating profit.
Bottom-line profit as a share of revenue.
Free cash flow relative to market value.
Growth
— 23.5/100 (20%)Prospect Capital Corporation faces growth headwinds with declining or stagnant revenue trends.
Revenue trajectory over the last twelve months.
Year-over-year earnings per share growth.
Analyst consensus for future revenue growth.
Analyst consensus for future earnings growth.
Risk
— 71.0/100 (15%)Prospect Capital Corporation maintains a reasonable risk profile with manageable debt levels.
Total debt relative to shareholder equity.
Short-term liquidity — ability to pay near-term obligations.
Earnings capacity relative to interest payments.
Valuation
— 100.0/100 (15%)Prospect Capital Corporation appears attractively valued relative to its earnings, cash flows, and sector peers.
Inverse of forward P/E — higher yield means cheaper stock.
How many years of FCF the market cap represents.
P/E relative to earnings growth — lower is more attractive.
Moat
— 10/100 (25%)Prospect Capital Corporation operates in a highly competitive environment with limited sustainable advantages. The Moat pillar evaluates competitive advantages across five dimensions: Switching Costs, Network Effects, Cost Advantage, Intangible Assets, and Scale & Ecosystem. Sign in to customize moat ratings for PSEC.
Score Composition
Financial Data
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How is the PSEC UQS Score Calculated?
The UQS (Unified Quality Score) for Prospect Capital Corporation is calculated using a proprietary 6-pillar framework with 29 financial metrics. Each pillar evaluates a different dimension on a 0–100 scale, then combines into a single weighted score. Scoring thresholds are calibrated per sector. Momentum is an optional Pro toggle — without it, you get the 5-pillar / 25-metric core shown below.
Quality (25%) measures profitability and capital efficiency — ROIC, ROE, margins, GP/Assets, and FCF Yield.
Moat (25%) assesses Prospect Capital Corporation's competitive advantages across switching costs, network effects, cost advantages, intangible assets, and ecosystem scale.
Growth (20%) tracks revenue trajectory and earnings momentum, combining historical results with analyst forward estimates.
Risk (15%) is inversely scored — lower leverage and strong balance sheet health result in higher scores.
Valuation (15%) measures whether Prospect Capital Corporation is fairly priced using earnings yield, price-to-FCF, PEG ratio, and EV/EBITDA relative to sector peers.
Six investor-inspired presets are available, each with different pillar weights: Balanced, Buffett, Munger, Lynch, Cathie Wood, and Graham. The public score shown here uses the Balanced preset. Learn more in our FAQ.