Reviewing Stellus Capital Investment (SCM) & Its Peers

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 competitors? We will compare Stellus Capital Investment to related businesses based on the strength of its risk, dividends, earnings, profitability, analyst recommendations, valuation and institutional ownership.

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 insiders. Comparatively, 13.1% of shares of all “Capital Markets” companies are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Stellus Capital Investment and its competitors’ 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	314.79%	9.90%	3.46%

Valuation and Earnings

This table compares Stellus Capital Investment and its competitors top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Stellus Capital Investment	$102.14 million	$27.05 million	11.71
Stellus Capital Investment Competitors	$3.11 billion	$397.40 million	15.15

Stellus Capital Investment’s competitors have higher revenue and earnings than Stellus Capital Investment. Stellus Capital Investment is trading at a lower price-to-earnings ratio than its competitors, 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 15.0%. 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.

Volatility and Risk

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

Analyst Recommendations

This is a breakdown of current ratings for Stellus Capital Investment and its competitors, as provided 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	5605	20212	22567	650	2.37

Stellus Capital Investment presently has a consensus target price of $9.33, suggesting a potential upside of 39.83%. As a group, “Capital Markets” companies have a potential upside of 23.41%. Given Stellus Capital Investment’s higher possible upside, analysts clearly believe Stellus Capital Investment is more favorable than its competitors.

Summary

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

Stellus Capital Investment Company Profile

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.