Comparing Prospect Capital (PSEC) and Eaton Vance Floating-Rate Income Trust (EFT)

Prospect Capital (NASDAQ: PSEC) and Eaton Vance Floating-Rate Income Trust (NYSE:EFT) are both financials companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Earnings and Valuation

This table compares Prospect Capital and Eaton Vance Floating-Rate Income Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Prospect Capital $701.05 million 3.52 $252.90 million $0.57 11.96
Eaton Vance Floating-Rate Income Trust N/A N/A N/A N/A N/A

Prospect Capital has higher revenue and earnings than Eaton Vance Floating-Rate Income Trust.

Profitability

This table compares Prospect Capital and Eaton Vance Floating-Rate Income Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Prospect Capital 31.02% 8.36% 4.62%
Eaton Vance Floating-Rate Income Trust N/A N/A N/A

Insider & Institutional Ownership

14.7% of Prospect Capital shares are held by institutional investors. 7.1% of Prospect Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Prospect Capital has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500. Comparatively, Eaton Vance Floating-Rate Income Trust has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.

Dividends

Prospect Capital pays an annual dividend of $0.72 per share and has a dividend yield of 10.6%. Eaton Vance Floating-Rate Income Trust does not pay a dividend. Prospect Capital pays out 126.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current recommendations and price targets for Prospect Capital and Eaton Vance Floating-Rate Income Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prospect Capital 1 3 0 0 1.75
Eaton Vance Floating-Rate Income Trust 0 0 0 0 N/A

Prospect Capital presently has a consensus price target of $6.50, suggesting a potential downside of 4.69%. Given Prospect Capital’s higher possible upside, research analysts plainly believe Prospect Capital is more favorable than Eaton Vance Floating-Rate Income Trust.

Summary

Prospect Capital beats Eaton Vance Floating-Rate Income Trust on 9 of the 10 factors compared between the two stocks.

About Prospect Capital

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 Eaton Vance Floating-Rate Income Trust

Eaton Vance Floating-Rate Income Trust (the Trust) is a diversified, closed-end management investment company. The Trust’s investment objective is to provide a high level of current income. The Trust will, as a secondary objective, also seek preservation of capital to the extent consistent with its primary goal of high current income. Normally, the Trust invests approximately 80% of its total assets in senior loans of domestic and foreign borrowers that are denominated in the United States dollars, euros, British pounds, Swiss francs, Canadian dollars and Australian dollars. The Trust invests in a range of sectors, including healthcare, electronics/electrical, business equipment and services, retailers (except food and drug), chemicals and plastics, food products, oil and gas, lodging and casinos, insurance, and leisure goods/activities/movies. Eaton Vance Management is the investment advisor of the Trust.

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