Prospect Capital Corporation Earnings Recaps
Q4 2026
Aug 23, 2026
Prospect Capital’s shares edged up modestly by 2.2% following Q4 earnings, reflecting a largely in-line quarter with no major surprises in income, portfolio composition, or credit metrics.
Key takeaways
- Net investment income (NII) was stable at $78 million, or $0.15 per common share, unchanged from the prior quarter.
- NAV stood at $2.9 billion, or $5.71 per share, with net debt to total assets at 28.6%, indicating steady leverage.
- Successfully closed the $328 million sale of Valley Electric, delivering a 20.5% realized gross IRR and 4.8x multiple of invested capital on the investment.
- Middle market lending remained the core focus, comprising 85% of investments at cost, with 91% of originations in the quarter as first lien senior secured loans.
- Credit quality was stable: nonaccruals at 0.7% of assets and lower net leverage and higher coverage ratios than peers, supporting portfolio resilience.
Q3 2026
May 9, 2026
Shares plunged 10.2% as investors reacted negatively to the cautious business mix shift and underwhelming income growth, highlighting ongoing challenges in rebalancing the portfolio and margin pressure despite strategic progress.
Key takeaways
- Net investment income (NII) was $78 million, or $0.16 per common share, signaling modest income growth amid a portfolio transition.
- The firm’s first lien senior secured loan mix rose sharply by 790 basis points to 72% since June 2024, but this shift appears to be slowing portfolio yield expansion.
- Payment-in-kind interest income declined 41% year-over-year, reducing the income contribution to 11% of total investment income for the quarter — a key driver of income deceleration.
- Non-accruals remained low and stable at 0.7% of total assets (FMV), reflecting steady credit quality but limited upside contribution to earnings.
- Real estate holdings accounted for 14% of investments at cost, with $229 million unrealized gains, but sales and rotation into lower-yielding first lien loans point to margin compression risks.
Q2 2026
Feb 11, 2026
Prospect Capital reported strong performance in Q2 FY2026, delivering a net investment income of $91 million and focusing on asset rotation toward first lien senior secured loans, which now comprise 71.4% of the portfolio.
Key takeaways
- Net investment income of $91 million equates to $0.19 per common share with NAV at approximately $3 billion.
- Increased first lien senior secured loans by 728 basis points since June 2024, now making up 71.4% of investments.
- Successfully reduced exposure to second lien loans and subordinated structured notes, with the latter near zero, enhancing portfolio quality.
- Monthly common shareholder distributions maintained at $0.045 per share for February through April.
- Interest income constituted 92% of total investment income, showcasing strong recurring revenue.