Is Prospect Capital (PSEC) a Great Value Stock Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.73. This compares to its industry's average Forward P/E of 12.43. 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 valuation metric that we should highlight is PSEC's 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 1.96. Within the past 52 weeks, PSEC's P/B has been as high as 0.81 and as low as 0.61, with a median of 0.73.
Finally, investors should note that PSEC has a P/CF ratio of 7.99. 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. PSEC's current P/CF looks attractive when compared to its industry's average P/CF of 15.56. Over the past 52 weeks, PSEC's P/CF has been as high as 10.62 and as low as 6.85, with a median of 8.06.
Value investors will likely look at more than just these metrics, but the above data helps show that Prospect Capital is likely undervalued currently. And when considering the strength of its earnings outlook, PSEC sticks out at as one of the market's strongest value stocks.
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