Is Prospect Capital (PSEC) a Great Value Stock Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Prospect Capital (PSEC) is a stock many investors are watching right now. PSEC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.67. This compares to its industry's average Forward P/E of 12.68. Over the last 12 months, PSEC's Forward P/E has been as high as 10.09 and as low as 7.22, with a median of 9.
Another notable valuation metric for PSEC is its P/B ratio of 0.79. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. PSEC's current P/B looks attractive when compared to its industry's average P/B of 2.04. Over the past year, PSEC's P/B has been as high as 0.81 and as low as 0.61, with a median of 0.73.
Finally, our model also underscores that PSEC has a P/CF ratio of 7.94. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.77. Over the past year, PSEC's P/CF has been as high as 10.62 and as low as 6.87, with a median of 8.06.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Prospect Capital is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PSEC feels like a great value stock at the moment.
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