ARCC vs PSEC

For growth investors, Ares Capital Corporation (ARCC) is the stronger pick with 32.

9% revenue growth year-over-year, versus -159. 2% for Prospect Capital Corporation (PSEC). Ares Capital Corporation (ARCC) offers the better valuation at 10. 3x trailing P/E (10. 0x forward), making it the more compelling value choice. Analysts rate Ares Capital Corporation (ARCC) a "Buy" — based on 32 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On forward P/E, Prospect Capital Corporation is actually cheaper at 5.

9x — notably different from the trailing picture, reflecting expected earnings growth.

Over the past 5 years, Ares Capital Corporation (ARCC) delivered a total return of +49.

5%, compared to -24. 7% for Prospect Capital Corporation (PSEC). Over 10 years, the gap is even starker: ARCC returned +139. 7% versus PSEC's +36. 6%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Ares Capital Corporation (ARCC) is the lower-risk stock at 0.

77β versus Prospect Capital Corporation's 0. 93β — meaning PSEC is approximately 20% more volatile than ARCC relative to the S&P 500. On balance sheet safety, Prospect Capital Corporation (PSEC) carries a lower debt/equity ratio of 70% versus 112% for Ares Capital Corporation — giving it more financial flexibility in a downturn.

By revenue growth (latest reported year), Ares Capital Corporation (ARCC) is pulling ahead at 32.

9% versus -159. 2% for Prospect Capital Corporation (PSEC). On earnings-per-share growth, the picture is similar: Ares Capital Corporation grew EPS -23. 8% year-over-year, compared to -475. 0% for Prospect Capital Corporation. Higher growth typically commands a higher valuation multiple — check whether the premium P/E or P/S is justified by the growth rate using the PEG ratio.

Prospect Capital Corporation (PSEC) is the more profitable company, earning 169.

8% net margin versus 41. 3% for Ares Capital Corporation — meaning it keeps 169. 8% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: PSEC leads at 169. 8% versus 69. 7% for ARCC. At the gross margin level — before operating expenses — PSEC leads at 147. 0%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

On forward earnings alone, Prospect Capital Corporation (PSEC) trades at 5.

9x forward P/E versus 10. 0x for Ares Capital Corporation — 4. 1x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for ARCC: 14. 2% to $21. 88.

All stocks in this comparison pay dividends.

Prospect Capital Corporation (PSEC) offers the highest yield at 27. 2%, versus 2. 0% for Ares Capital Corporation (ARCC).

For long-horizon retirement investors, Ares Capital Corporation (ARCC) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0.

77), 2. 0% yield, +139. 7% 10Y return). Both have compounded well over 10 years (ARCC: +139. 7%, PSEC: +36. 6%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Financial Services sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both.

In terms of investment character: ARCC is a mid-cap high-growth stock; PSEC is a small-cap income-oriented stock. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.