What’s to Expect from Prospect Capital in Fiscal Q4 2018

Past performance

In the third fiscal quarter of 2018, Prospect Capital (PSEC) had NII (net investment income) of $70.4 million, which implies a fall YoY (year-over-year) and sequentially. Its net investment income per share also declined sequentially and YoY. The sequential decline was mainly due to an increase in administrative overhead expenses.

What’s to Expect from Prospect Capital in Fiscal Q4 2018

According to Wall Street analysts, Prospect Capital is expected to report NII per share of $0.19 in its fiscal fourth quarter. It has a high estimate of $0.20 and a low estimate of $0.18. In its fiscal third quarter, it had total investment income of $162.8 million out of total interest income was $145.8 million.

What could impact Prospect Capital’s performance?

A substantial portion of Prospect Capital’s total investment income comes from its interest income. Thus, interest rate changes mainly affect its total investment income. A rise in interest rates negatively impacts its business fundamentals, primarily because it leads to a rise in its cost of capital. Thus, higher interest rates could lead to a decline in its lending capabilities.

Lower lending could, in turn, impact Prospect Capital’s interest income and thus result in a fall in net investment income. Its competitors (XLF) are expected to report the following EPS in the June quarter:

  • BlackRock Capital Investment (BKCC): $0.19
  • Ares Capital (ARCC): $0.39
  • Apollo Investment (AINV): $0.15