Prospect Capital Corporation (0R25.L) delivered a solidQQ3 2024 with positive operating cash flow and a strong equity base, supported by earnings strength in its private debt portfolio. Reported revenue of $132.452 million and net income of $144.361 million, accompanied by an EBITDA of $144.361 million and free cash flow of $65.955 million. The balance sheet remains robust with total assets of approximately $7.906 billion and total stockholders’ equity of about $5.302 billion, while the long-term debt load stands at $2.484 billion. The company trades at a modest P/B of ~0.43x and offers a dividend yield of roughly 4.2%, with a payout ratio around 66.4%. These metrics suggest a valuation discount relative to peers and potential for dividend sustainability, albeit with notable sensitivities to interest rates and credit markets.
The quarter shows a meaningful QoQ revenue decline versus Q2 2024, but YoY comparisons reflect a favorable base from prior periods and the absence/presence of one-off items affecting reported figures. Despite the seemingly strong net income on the headline metric, analysts should scrutinize the underpinning sources of income (operating vs. other income) and confirm consistent cash flow generation given the substantial financing activity and dividend payout. In the near term, prospects hinge on credit performance in its middle-market loan book, origination activity, portfolio yield stability, and the ability to manage leverage and liquidity in a rising-rate environment.