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What's in Store for Prospect Capital (PSEC) in Q2 Earnings?

Zacks Equity Research

Prospect Capital Corporation PSEC is scheduled to announce second-quarter fiscal 2019 (ended Dec 31) results on Feb 6, after market close. Its revenues and earnings for the to-be-reported quarter are projected to grow year over year.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an increase in total investment income, partly offset by higher expenses.

The company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 9.1%.

Prospect Capital Corporation Price and EPS Surprise


Prospect Capital Corporation Price and EPS Surprise | Prospect Capital Corporation Quote

Activities of the company in the fiscal second quarter were inadequate to win analysts’ confidence. As a result, the consensus estimate for earnings of 22 cents remained unchanged over the past seven days. Nevertheless, it reflects a year-over-year improvement of 10%.

Further, the Zacks Consensus Estimate for sales of $183.7 million reflects growth of 13.1% on a year-over-year basis.

Before we take a look at what our quantitative model predicts for the fiscal second quarter, let’s check the factors that are likely to impact the results.

Factors to Influence Q2 Results

Given the expectation of higher prepayment activity during the to-be-reported quarter, total investment income is likely to be positively impacted. Also, with the resent increase in the LIBOR rates, Prospect Capital’s floating-rate debt investments that are tied to LIBOR will support investment income.

However, the company has been witnessing higher expenses over the past several quarters. As Prospect Capital continues to invest in the venture growth stage companies, operating expenses are likely to remain elevated.

Earnings Whispers

Here is what our quantitative model predicts:

According to our quantitative model, it cannot be conclusively predicted whether Prospect Capital will be able to beat the Zacks Consensus Estimate this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Prospect Capital has an Earnings ESP of 0.00%.

Zacks Rank: Prospect Capital currently carries a Zacks Rank #3. While this increases the predictive power of ESP, we also need a positive Earnings ESP to be sure of an earnings beat.

Stocks That Warrant a Look

Here are some finance stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

Apollo Investment Corporation AINV is slated to release results on Feb 6. The company has an Earnings ESP of +0.72% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ares Capital Corporation ARCC is scheduled to release results on Feb 12. It has an Earnings ESP of +1.10% and carries a Zacks Rank #3.

Garrison Capital Inc. GARS has an Earnings ESP of +11.94% and has a Zacks Rank #2 (Buy). It is scheduled to report results on Mar 5.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

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Prospect Capital Corporation (PSEC) : Free Stock Analysis Report
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