Is Prospect Capital Corp. overvalued or undervalued?

As of 8 May 2025, the valuation grade for Prospect Capital Corp. has moved from very attractive to risky, indicating a significant deterioration in its financial standing. The company is currently considered overvalued, with a price-to-book value of 0.29 and an EV to EBITDA ratio of -15.07, reflecting its loss-making status. Additionally, the return on equity (ROE) stands at -5.03%, further emphasizing the challenges the company faces.
In comparison to its peers, Prospect Capital Corp. lags behind Janus Henderson Group Plc, which has a P/E ratio of 14.78, and Main Street Capital Corp., with a P/E of 9.97, both of which are in a more favorable valuation position. The company's recent stock performance has been notably poor, with a year-to-date return of -26.68%, contrasting sharply with the S&P 500's gain of 2.44% over the same period, reinforcing the notion that the stock is overvalued in its current state.