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Prospect Capital (PSEC) Q3 Earnings In Line, Revenues Climb

Prospect Capital’s PSEC third-quarter fiscal 2021 (ended Mar 31) net investment income of 19 cents per share came in line with the Zacks Consensus Estimate. Also, the bottom line was on par with the year-ago quarter number.

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

Net investment income came in at $73.4 million, up 7.2% from the prior-year quarter.

Total Investment Income Climbs, Expenses Rise

Total investment income came in at $159.5 million, up 3.2% year over year. This rise resulted from an increase in interest income and other income. However, the top-line figure missed the Zacks Consensus Estimate of $161.9 million.

Total operating expenses rose marginally from the prior-year quarter to $86.1 million.

Total Portfolio Value & Originations Decent

The fair value of Prospect Capital’s total investment portfolio was $5.9 billion as of Mar 31, 2021, up 4.6% from the previous quarter.
In the reported quarter, the company recorded $258.4 million of total originations, while repayments were $182.5 million.

Strong Balance-Sheet Position

As of Mar 31, 2020, Prospect Capital’s net asset value was $9.38 per share compared with $8.96 on Dec 31, 2020. Further, the company had $4.4 billion of unencumbered assets as of the same date.

At the end of the reported quarter, net of cash debt to equity ratio was 56.5%, down from 61.1% as of Dec 31, 2020.

Our Take

While higher expenses are expected to hurt Prospect Capital’s bottom line to an extent in the near term, its loan origination activity continues to be on track. This is anticipated to support the company’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 first-quarter 2021 net investment income of 30 cents per share beat the Zacks Consensus Estimate by a penny. However, the bottom line declined 18.9% from the year-ago quarter’s reported figure.

Ares Capital Corporation’s ARCC first-quarter core earnings of 43 cents per share surpassed the Zacks Consensus Estimate of 42 cents. Further, the bottom line rose 4.9% year over year.

TriplePoint Venture Growth BDC Corp.’s TPVG first-quarter 2021 net investment income came in at 29 cents per share. Also, the bottom line improved 29.3% from the year-ago quarter.

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