PSEC earnings analysis
What we found in PSEC's 10-K: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Prospect Capital returned to positive annual earnings in fiscal 2026, with $29.828 million of net income applicable to common stockholders and diluted EPS of $0.06 after a large fiscal 2025 loss. Lower debt balances, meaningful floating-rate sensitivity and the Valley Electric monetization support the recovery, but rising non-accrual exposure, distressed credits and a $5.71 NAV per common share versus $6.56 a year earlier temper the outlook. The filing provides no numeric annual guidance.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Returned to Positive Annual EPS
- Net increase in assets applicable to common stockholders improved to $29.828 million from a $593.762 million loss in fiscal 2025, producing diluted EPS of $0.06 versus $(1.35).
- Lower Operating Expense Base
- Net investment income remained substantial at $326.387 million, while total operating expenses before the $17.125 million administration-expense reimbursement declined to $330.192 million from $380.596 million.
- Positive Floating-Rate Sensitivity
- Interest-rate sensitivity remains favorable under the filing’s base-case structure: a 100-basis-point increase in rates would increase annual net investment income by approximately $24.747 million, while a 100-basis-point decline would reduce it by approximately $20.385 million.
- Lower Revolver Leverage
- The company reduced revolving-credit borrowings to $562.328 million from $856.322 million and increased its asset-coverage ratio on indebtedness to 339.4% from 319.4%.
- Senior-Lending Portfolio Focus
- The portfolio remained concentrated in private middle-market lending and investments: fair value was $6.343 billion across 91 portfolio companies, with first-lien debt representing $4.217 billion and equity $1.466 billion.
- Valley Electric Monetization
- A post-year-end realization provided a potential catalyst: on July 1, 2026, Valley Electric was sold for total consideration of $280.779 million, including repayment of $83.859 million of debt and a recorded realized gain of $131.821 million.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Rising Non-Accrual Exposure
- Credit stress increased materially: investments on non-accrual status represented approximately 0.7% of total assets at fair value versus 0.3% in the prior year, with cost basis rising to $298.227 million from $273.713 million.
- Bankruptcy and Valuation Losses
- Distressed portfolio marks remain a significant risk. First Brands’ second-lien term loan was valued at only $41 against $37.000 million of amortized cost, while STG Distribution filed Chapter 11 on January 12, 2026 and its third-out term loan had a fair value of zero at June 30, 2026.
- Rate-Cut Earnings Sensitivity
- Interest-rate declines could pressure earnings because 75.96% of interest-earning investments at fair value were floating-rate; the filing estimates a 300-basis-point rate decline would reduce annual net investment income by approximately $44.997 million.
- Concentrated Portfolio Exposure
- Portfolio and geographic concentration amplify downside risk: Consumer Finance and Equity REITs represented 18.1% and 17.1% of portfolio fair value, respectively, while Mississippi represented 15.1% and California 12.7%.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.06
- Segment
- Single operating and reporting segment; total investment income was $639.454 million
What they said about what is next.
The 10-K does not provide numeric annual earnings or revenue guidance. Subsequent-event disclosures provide declared monthly common dividends of $0.035 per share for September and October 2026.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 7, 2026
- Prospect Capital Corporation reported its Q3 2026 results with notable earnings performance, achieving an EPS of $0.16, beating estimates by approximately 45% despite a revenue miss of about 8%. The company's financial…
- 10-K · August 26, 2025
- Prospect Capital (Prospect) is a large externally-managed BDC that primarily lends to U.S. middle‑market private companies, with approximately $7.0 billion of total assets as of June 30, 2025. The firm emphasizes…
- 10-K · August 28, 2024
- Prospect Capital (PSEC) is a large externally-managed BDC focused on middle-market lending, control equity investments, real estate/REIT investments (NPRC) and structured credit. The 10-K discloses approximately $7.86…
- 10-Q · May 8, 2024
- Prospect Capital reported Total Investment Income of $202,215 (as presented in the filing) for the quarter ended March 31, 2024 and diluted EPS of $0.20. Investment income declined modestly year-over-year, but a…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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