Head-To-Head Review: Prospect Capital Corporation (PSEC) and Solar Senior Capital (SUNS)
Prospect Capital Corporation (NASDAQ: PSEC) and Solar Senior Capital (NASDAQ:SUNS) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.
This table compares Prospect Capital Corporation and Solar Senior Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Prospect Capital Corporation||36.08%||8.98%||4.94%|
|Solar Senior Capital||76.07%||7.98%||4.22%|
Insider & Institutional Ownership
15.2% of Prospect Capital Corporation shares are owned by institutional investors. Comparatively, 32.8% of Solar Senior Capital shares are owned by institutional investors. 7.1% of Prospect Capital Corporation shares are owned by insiders. Comparatively, 5.6% of Solar Senior Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Prospect Capital Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 10.6%. Solar Senior Capital pays an annual dividend of $1.41 per share and has a dividend yield of 8.0%. Prospect Capital Corporation pays out 102.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Solar Senior Capital pays out 94.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Risk & Volatility
Prospect Capital Corporation has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Solar Senior Capital has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.
This is a summary of current ratings and target prices for Prospect Capital Corporation and Solar Senior Capital, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Prospect Capital Corporation||1||3||0||0||1.75|
|Solar Senior Capital||0||1||2||0||2.67|
Prospect Capital Corporation presently has a consensus target price of $7.17, suggesting a potential upside of 5.70%. Solar Senior Capital has a consensus target price of $17.17, suggesting a potential downside of 2.68%. Given Prospect Capital Corporation’s higher possible upside, equities research analysts clearly believe Prospect Capital Corporation is more favorable than Solar Senior Capital.
Earnings & Valuation
This table compares Prospect Capital Corporation and Solar Senior Capital’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Prospect Capital Corporation||N/A||N/A||N/A||$0.70||9.69|
|Solar Senior Capital||N/A||N/A||N/A||$1.49||11.84|
Prospect Capital Corporation is trading at a lower price-to-earnings ratio than Solar Senior Capital, indicating that it is currently the more affordable of the two stocks.
Solar Senior Capital beats Prospect Capital Corporation on 8 of the 13 factors compared between the two stocks.
About Prospect Capital Corporation
Prospect Capital Corporation is a financial services company. The Company primarily lends to and invests in middle market privately held companies. The Company is a closed-end investment company. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. The Company invests primarily in senior and subordinated debt and equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes. The Company makes investments, including lending in private equity sponsored transactions, lending directly to companies not owned by private equity firms, control investments in corporate operating companies, control investments in financial companies, investments in structured credit, real estate investments, investments in syndicated debt, aircraft leasing and online lending. The Company is managed by its investment advisor, Prospect Capital Management L.P.
About Solar Senior Capital
Solar Senior Capital Ltd. is a closed-end, externally managed, non-diversified management investment company. The Company’s investment objective is to seek to maximize current income consistent with the preservation of capital. The Company seeks to achieve its investment objective by directly and indirectly investing in senior loans, including first lien, unitranche, and second lien debt instruments, made to private middle-market companies whose debt is rated below investment grade, which it refers to collectively as senior loans. It may also invest in debt of public companies that are thinly traded or in equity securities. Under normal market conditions, at least 80% of the value of its net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans. It invests in privately held the United States middle-market companies. Its investment activities are managed by Solar Capital Partners, LLC (Solar Capital Partners or the Investment Advisor).
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