Stellus Capital Investment (SCM) & The Competition Financial Analysis

Stellus Capital Investment (NYSE:SCM) is one of 1,746 publicly-traded companies in the “Capital Markets” industry, but how does it contrast to its peers? We will compare Stellus Capital Investment to related businesses based on the strength of its institutional ownership, earnings, risk, profitability, dividends, valuation and analyst recommendations.

Insider & Institutional Ownership

13.2% of Stellus Capital Investment shares are held by institutional investors. Comparatively, 30.6% of shares of all “Capital Markets” companies are held by institutional investors. 4.2% of Stellus Capital Investment shares are held by company insiders. Comparatively, 13.1% of shares of all “Capital Markets” companies are held by company 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.

Analyst Ratings

This is a breakdown of current ratings for Stellus Capital Investment and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stellus Capital Investment	1	4	1	0	2.00
Stellus Capital Investment Competitors	5623	20221	22578	650	2.37

Stellus Capital Investment presently has a consensus target price of $9.33, indicating a potential upside of 38.17%. As a group, “Capital Markets” companies have a potential upside of 23.44%. Given Stellus Capital Investment’s higher probable upside, equities research analysts clearly believe Stellus Capital Investment is more favorable than its peers.

Valuation and Earnings

This table compares Stellus Capital Investment and its peers gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Stellus Capital Investment	$102.14 million	$27.05 million	11.85
Stellus Capital Investment Competitors	$2.38 billion	$397.48 million	15.02

Stellus Capital Investment’s peers have higher revenue and earnings than Stellus Capital Investment. Stellus Capital Investment is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

Stellus Capital Investment pays an annual dividend of $1.00 per share and has a dividend yield of 14.8%. Stellus Capital Investment pays out 175.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Capital Markets” companies pay a dividend yield of 3.2% and pay out 29.2% of their earnings in the form of a dividend.

Profitability

This table compares Stellus Capital Investment and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stellus Capital Investment	17.92%	8.66%	3.14%
Stellus Capital Investment Competitors	314.70%	9.80%	3.42%

Risk & Volatility

Stellus Capital Investment has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, Stellus Capital Investment’s peers have a beta of 0.79, indicating that their average share price is 21% less volatile than the S&P 500.

Summary

Stellus Capital Investment peers beat Stellus Capital Investment on 13 of the 15 factors compared.

About Stellus Capital Investment

Stellus Capital Investment Corporation is a business development company that provides financing to middle-market businesses. Its investments are focused primarily on privately held companies that need capital for growth, acquisitions, recapitalizations, or ownership changes. The company invests mainly in debt, including first-lien, second-lien, and unitranche loans, and may also make equity investments. Its portfolio is concentrated primarily in companies in the United States. Stellus Capital Investment Corporation is externally managed by Stellus Capital Management, an investment firm specializing in middle-market lending.