P/E Ratio: 7.5X
Forward dividend yield: 15.2%
Shares of Prospect Capital, a business development company that makes middle-market debt investments in private companies, have fallen nearly 16% in the past 52 weeks, and are off 32% at their current level of $8.40 from their 52-week high of $12.38 on March 11.
The company is slated to report its fiscal first-quarter on Nov. 11, and the average estimate of analysts polled by Thomson Reuters is for earnings of 27 cents a share in the September-ended period on revenue of $54.8 million.Sentiment on Wall Street is overwhelmingly bearish, however, with 8 of the 9 analysts covering the stock at either hold (7) or underperform (1). The pessimism follows a poor fourth-quarter report in late August when the company missed the consensus view by more than 14%, reporting a profit of 31 cents a share vs. an estimate of 36 cents, weighed down by the shift of a loan to H&M to non-accrual status. At the time, Evercore Partners, which rates the stock at underperform, said interest and dividend income were lower than expected, and that a $100 million buyback authorization announced earlier in August likely wouldn't get much use. "Given an 'advanced pipeline' of deals totaling $300 mil, we don't expect any share repurchases," the firm said in its Aug. 30 report, adding later: "We are lowering our target price to $9 from $10 to reflect lower peer valuations and increased concern about dividend coverage."