why Prospect Capital Corporation [PSEC] is a Good Choice for Investors After New Price Target of $4.25

Prospect Capital Corporation [NASDAQ: PSEC] gained 0.40% on the last trading session, reaching $5.02 price per share at the time. The company report on August 3, 2020 that Prospect Capital Corporation Launches $1 Billion 5.5% Perpetual Preferred Stock Offering.

Prospect Capital Corporation (NASDAQ:PSEC) (“Prospect”) announced today a continuous preferred stock offering of up to 40,000,000 shares, with a $1,000,000,000 aggregate liquidation preference (the “Preferred Stock”) (the “Offering”). Each share of Preferred Stock will have an offering price of $25.00 per share, before the application of any commissions and discounts.

The Preferred Stock will have a stated annual dividend rate of 5.50%, paid monthly (resulting in an annual percentage yield of 5.64%), and will rank senior to Prospect’s common stock. Prospect expects to use the net proceeds from the Offering to maintain and enhance balance sheet liquidity, including repayment of debt under its credit facility, if any, investments in high quality short-term debt instruments, or a combination thereof, and to make long-term investments in accordance with its investment objective. The Preferred Stock provides Prospect with a diversified source of accretive fixed-rate capital without creating maturity risk due to the perpetual term.

Prospect Capital Corporation represents 370.82 million in outstanding shares, while the company has a total market value of $1.86 billion with the latest information. PSEC stock price has been found in the range of $4.99 to $5.03.

If compared to the average trading volume of 2.03M shares, PSEC reached a trading volume of 1071804 in the most recent trading day, which is why market watchdogs consider the stock to be active.

Here is what top equities market gurus are saying about Prospect Capital Corporation [PSEC]:

Based on careful and fact-backed analyses by Wall Street experts, the current consensus on the target price for PSEC shares is $4.25 per share. Analysis on target price and performance of stocks is usually carefully studied by market experts, and the current Wall Street consensus on PSEC stock is a recommendation set at 4.00. This rating represents a strong Buy recommendation, on the scale from 1 to 5, where 5 would mean strong sell, 4 represents Sell, 3 is Hold, and 2 indicates Buy.

Wells Fargo have made an estimate for Prospect Capital Corporation shares, keeping their opinion on the stock as Underweight, with their previous recommendation back on June 25, 2020. The new note on the price target was released on April 20, 2020, representing the official price target for Prospect Capital Corporation stock. Previously, the target price had yet another drop from $7 to $6, while Barclays kept a Underweight rating on PSEC stock.

The Average True Range (ATR) for Prospect Capital Corporation is set at 0.10, with the Price to Sales ratio for PSEC stock in the period of the last 12 months amounting to 2.90. The Price to Book ratio for the last quarter was 0.63.

Trading performance analysis for PSEC stock

Prospect Capital Corporation [PSEC] gain into the green zone at the end of the last week, gaining into a positive trend and gaining by 0.40. With this latest performance, PSEC shares gained by 3.29% in over the last four-week period, additionally sinking by -23.71% over the last 6 months – not to mention a drop of -22.65% in the past year of trading.

Overbought and oversold stocks can be easily traced with the Relative Strength Index (RSI), where an RSI result of over 70 would be overbought, and any rate below 30 would indicate oversold conditions. An RSI rate of 50 would represent a neutral market momentum. The current RSI for PSEC stock in for the last two-week period is set at 45.13, with the RSI for the last a single of trading hit 51.31, and the three-weeks RSI is set at 50.51 for Prospect Capital Corporation [PSEC]. The present Moving Average for the last 50 days of trading for this stock 5.14, while it was recorded at 5.00 for the last single week of trading, and 5.55 for the last 200 days.

Prospect Capital Corporation [PSEC]: A deeper dive into fundamental analysis

Operating Margin for any stock indicates how profitable investing would be, and Prospect Capital Corporation [PSEC] shares currently have an operating margin of +21.29 and a Gross Margin at +72.16. Prospect Capital Corporation’s Net Margin is presently recorded at +20.11.

Return on Total Capital for PSEC is now 2.68, given the latest momentum, and Return on Invested Capital for the company is 2.61. Return on Equity for this stock inclined to 4.30, with Return on Assets sitting at 2.48. When it comes to the capital structure of this company, Prospect Capital Corporation [PSEC] has a Total Debt to Total Equity ratio set at 72.07. Additionally, PSEC Total Debt to Total Capital is recorded at 41.88, with Total Debt to Total Assets ending up at 41.08. Long-Term Debt to Equity for the company is recorded at 65.16, with the Long-Term Debt to Total Capital now at 37.87.

Receivables Turnover for the company is 26.32 with a Total Asset Turnover recorded at a value of 0.12.

Prospect Capital Corporation [PSEC]: An earnings per share (EPS) analysis

With the latest financial reports released by the company, Prospect Capital Corporation posted 0.19/share EPS, while the average EPS was predicted by analysts to be reported at 0.21/share. When compared, the two values demonstrate that the company fail the estimates by a Surprise Factor of -9.50%. The progress of the company may be observed through the prism of EPS growth rate, while Wall Street analysts are focusing on predicting the 5-year EPS growth rate for PSEC. When it comes to the mentioned value, analysts are expecting to see the 5-year EPS growth rate for Prospect Capital Corporation go to 5.00%.

An analysis of insider ownership at Prospect Capital Corporation [PSEC]

There are presently around $218 million, or 14.48% of PSEC stock, in the hands of institutional investors. The top three institutional holders of PSEC stocks are: LSV ASSET MANAGEMENT with ownership of 7,545,984, which is approximately 17.959% of the company’s market cap and around 25.49% of the total institutional ownership; MUZINICH & CO., INC., holding 2,457,352 shares of the stock with an approximate value of $12.34 million in PSEC stocks shares; and VAN ECK ASSOCIATES CORP, currently with $11.34 million in PSEC stock with ownership of nearly 14.783% of the company’s market capitalization.

Positions in Prospect Capital Corporation stocks held by institutional investors increased at the end of May and at the time of the May reporting period, where 86 institutional holders increased their position in Prospect Capital Corporation [NASDAQ:PSEC] by around 4,656,554 shares. Additionally, 107 investors decreased positions by around 14,760,907 shares, while 46 investors held positions by with 23,945,172 shares. The mentioned changes placed institutional holdings at 43,362,633 shares, according to the latest SEC report filing. PSEC stock had 18 new institutional investments in for a total of 547,363 shares, while 38 institutional investors sold positions of 4,577,019 shares during the same period.

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