Prospect Capital Corporation (NASDAQ:PSEC) is scheduled to report earnings May 10th. Last quarter the company beat NII expectations along with a positive forward outlook. What can we expect this quarter?
Net Investment Income Steady
Net investment income should remain steady but there is a chance it may be a little stronger. One of the long running efforts of management has been to roll lower yielding assets into higher yielding ones. These efforts have been bearing fruit in recent quarters and could do so again this quarter, serving to increase net portfolio yield. At last report, the portfolio yield was 13.3%, up 1% YOY and 0.3% from the previous quarter.
The analysts agree with this assessment. The low estimate is $0.24 and high is $0.29 with an average of $0.26. Consensus rose by a penny just after the release of the previous quarter's results and have held steady since then. In that time, full-year consensus rose from $1.01 to $1.05 before stabilizing at $1.04.
NAV And Discount Still Provide Opportunity
Net asset value fell last quarter, about -5%, but this fall should not be continued this quarter. The drop was due largely to market conditions and not due to a material defect in the portfolio. According to statements in the fiscal Q2 earnings report the decline was "unrealized depreciation based on volatility in the capital markets."
"We estimate approximately 74% of the unrealized write-down we experienced this quarter related to macro changes in the capital markets as opposed to specific portfolio credit issues, approximately 18% related to energy-related companies in the portfolio and the remaining 8% related to specific non-energy individual credit matters."
Since then, stabilization in the energy market and credit market has been seen. Barring unforeseen deterioration, this stabilization should support NAV if not affect an increase.
The company's
