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 investment appeal. The company appears to be overvalued given its current metrics, particularly with a Price to Book Value of 0.29 and an EV to Sales ratio of 3.34, which suggests that the market is pricing the company at a premium despite its losses. Additionally, the negative ROCE of -1.90% and ROE of -5.03% further highlight the company's struggles to generate returns.
In comparison to its peers, Prospect Capital Corp. shows a stark contrast, with Janus Henderson Group Plc having a P/E ratio of 17.06 and Main Street Capital Corp. at 10.99, both indicating healthier valuations. The company's stock has underperformed significantly against the S&P 500, with a year-to-date return of -38.05% compared to the index's 12.22%, reinforcing the notion that it is currently overvalued.