PROSPECT CAPITAL CORP (NASDAQ:PSEC) Reports Mixed Q1 2025 Earnings, Beats on NII but Misses on Revenue

PROSPECT CAPITAL CORP (NASDAQ:PSEC) has reported financial results for its fiscal first quarter ended September 30, 2025. The business development company's earnings release revealed a mixed financial picture, with core earnings surpassing analyst expectations while total investment income saw a decline from the prior year period.

Earnings Performance vs. Estimates

The company's net investment income (NII), a key profitability metric for BDCs, came in above what analysts had projected for the quarter. Prospect Capital reported NII per share of $0.17, which exceeded the consensus estimate of $0.1122. This represents a significant beat on the bottom line.

However, the company's top-line results did not meet expectations. Total investment income for the quarter was $157.6 million, falling short of the analyst revenue estimate of $172.9 million. This performance reflects a decrease from the $196.3 million reported in the same quarter last year.

Key quarterly financial highlights include:

• Net investment income per share: $0.17 (Estimated: $0.1122)
• Total investment income: $157.6 million (Estimated: $172.9 million)
• Net asset value per common share: $6.45, down from $6.56 at the end of the previous quarter

Market Reaction and Price Action

The market's initial response to this earnings report has been moderately positive. Following the release, the stock has shown an after-market performance increase of approximately 1.18%. This upward movement suggests investors are focusing on the earnings beat and the company's maintained distribution.

This near-term positive reaction contrasts with the stock's recent performance trends:

• Last week: -3.04%
• Last two weeks: -6.93%
• Last month: -6.59%

The immediate positive price action indicates that investors may be viewing the earnings beat as a more significant driver than the revenue miss, particularly within the context of the stock's recent declines.

Strategic and Operational Highlights

Prospect Capital's earnings release detailed several important strategic developments and operational metrics beyond the headline earnings figures.

The company is continuing its strategic shift toward its core business of first lien senior secured middle market loans, which now represent 71.1% of its investments based on cost. This represents an increase of 701 basis points since June 2024. Concurrently, the company has been actively exiting its subordinated structured notes portfolio and certain equity-linked assets.

Portfolio and balance sheet developments include:

• Declared monthly distributions of $0.045 per common share for November 2025, December 2025, and January 2026
• Total assets of $6.64 billion, down from $6.80 billion at the end of the previous quarter
• Completed issuance of approximately $168 million in senior unsecured 5.5% Series A Notes due 2030
• Net of cash debt to total assets ratio improved to 28.2% from 30.4% in the prior quarter
• Available liquidity of $1.52 billion in balance sheet cash and undrawn revolving credit facility commitments

Looking Ahead

While the earnings release did not provide specific forward-looking financial guidance, analyst estimates for the coming quarters offer insight into market expectations. For the full 2026 fiscal year, analysts are projecting earnings per share of $0.459 on sales of $671.8 million. For the next quarter (Q2 2026), the consensus estimates are EPS of $0.112 on sales of $169 million.

The company's strategic focus on rotating assets into first lien senior secured loans while exiting non-core positions appears to be progressing. The improvement in leverage metrics and maintained distribution rate may provide support for investor confidence despite the year-over-year decline in total investment income.

For detailed historical earnings data and future analyst estimates, view the complete earnings and estimates page for PSEC.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.