Stellus Capital Investment (SCM)
NYSE:SCM
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Stellus Capital
(NYSE:SCM)
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Rating:55Neutral
Price Target:
$9.00
▼(-28.57% Downside)
Action:ReiteratedDate:03/13/26
The score is primarily held back by weak financial quality—especially consistently negative operating/free cash flow and meaningful leverage—alongside bearish technical momentum. Offsetting factors include an exceptionally high dividend yield and a generally stable portfolio with supportive capital actions (buyback and debt repayment plans), though NAV and dividend coverage pressures temper the outlook.
Positive Factors
Secured, floating-rate loan book
A predominantly secured, floating-rate portfolio offers durable downside protection and ongoing rate sensitivity. Collateralization reduces loss severity in stress, while floating coupons help net interest income reprice with rising base rates, supporting mid-term cash yields and interest income resilience.
Negative Factors
Consistent negative operating/free cash flow
Persistent negative operating and free cash flow means reported earnings are not converting to cash, constraining internal capital for dividends, buybacks or debt reduction. Over several quarters this limits financial flexibility and raises reliance on external funding or asset sales to meet distributions and obligations.
Read all positive and negative factors
Positive Factors
Negative Factors
Secured, floating-rate loan book
A predominantly secured, floating-rate portfolio offers durable downside protection and ongoing rate sensitivity. Collateralization reduces loss severity in stress, while floating coupons help net interest income reprice with rising base rates, supporting mid-term cash yields and interest income resilience.
Read all positive factors
Stellus Capital (SCM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$270.08M
Dividend Yield12.83%
Average Volume (3M)261.50K
Price to Earnings (P/E)17.2
Beta (1Y)0.58
Revenue Growth90.34%
EPS Growth-44.25%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.29
Shares Outstanding28,947,254
10 Day Avg. Volume150,214
30 Day Avg. Volume261,500
Financial Highlights & Ratios
PEG Ratio-0.28
Price to Book (P/B)<0.01
Price to Sales (P/S)3.47
P/FCF Ratio-0.01
Enterprise Value/Market Cap1.46K
Enterprise Value/Revenue3.80K
Enterprise Value/Gross Profit4.99K
Enterprise Value/Ebitda6.20K
Forecast
1Y Price Target
$9.00Price Target Upside-28.57% Downside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)1.04
Revenue Forecast (FY)$99.87M
Stellus Capital Business Overview & Revenue Model
Company Description
Stellus Capital Investment Corporation is a business development company specializing in investments in private middle-market companies. It invests through first lien, second lien, unitranche, and mezzanine debt financing, often with a correspondi...
How the Company Makes Money
Stellus Capital makes money primarily through investment income generated from its portfolio of loans and related investments. Its key revenue stream is interest income earned on debt investments (e.g., first-lien and second-lien loans, subordinat...
Stellus Capital Earnings Call Summary
Earnings Call Date:Mar 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Neutral
The call presented a balanced view: portfolio metrics and asset quality are generally stable (81% on/ ahead of plan, 99% secured, 92% floating-rate) and management announced strategic positives including repayment of debt, a $20M buyback program, and an advisor transaction expected to expand origination channels. Offsetting these positives are a quarterly NAV decline ($0.23 per share), distributions (declared $0.34 per share) above the most recent quarter's NII ($0.29), a slight increase in nonaccruals (5 companies; 7.5% cost, 4.1% FV), and higher PIK income—indicating selective borrower stress and near-term earnings pressure. Overall, the call signals stability and constructive strategic actions but also highlights short-term earnings and NAV headwinds.Positive Updates
Stable Portfolio Size and Activity
Investment portfolio at fair value totaled approximately $1.01 billion across 115 portfolio companies (unchanged vs. 9/30/2025); during Q4 invested $34.1 million in 4 new companies and had $18 million in other investment activity at par; received 4 full repayments totaling $37.9 million and $9.1 million of other repayments.
Negative Updates
Net Asset Value Decline in Quarter
Net asset value per share decreased by $0.23 during the quarter driven by $0.11 per share of dividend payments that exceeded earnings and $0.12 per share of net realized losses primarily from two debt investments.
Read all updates
Q4-2025 Updates
Positive
Negative
Stable Portfolio Size and Activity
Investment portfolio at fair value totaled approximately $1.01 billion across 115 portfolio companies (unchanged vs. 9/30/2025); during Q4 invested $34.1 million in 4 new companies and had $18 million in other investment activity at par; received 4 full repayments totaling $37.9 million and $9.1 million of other repayments.
Read all positive updates
Company Guidance
Guidance for 2026 included maintaining a $0.34-per-share monthly dividend (declared for Q1 and expected to be kept for Q2), repurchasing up to $20 million of stock (shares trading at ~30% discount to NAV and just under $9/share, implying a ~15% annualized yield on the Q2 rate), and no change to targeted leverage (~1:1 on the regulatory test and ~2:1 including SBIC debentures); management expects the portfolio to remain at the current level or slightly less (approximately $996 million across 115 companies), anticipates Q1 equity realizations of about $2 million (yielding a ~$1 million realized gain), expects additional SBA debenture capacity after repaying $65 million of debentures (and $50 million of 2026 notes repaid early), looks for benefits from the advisor joining Ridge Post Capital (Ridge Post AUM > $43 billion) with the deal expected to close mid‑2026, and will reassess the dividend and earnings trajectory as SOFR, new SBA leverage, and realization activity evolve.Stellus Capital Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
55
Neutral
Cash Flow
24
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 103.67M | 82.72M | 53.24M | 45.42M | 61.38M |
| Gross Profit | 78.87M | 51.21M | 21.23M | 20.95M | 42.66M |
| EBITDA | 63.57M | 47.46M | 16.01M | 15.87M | 37.12M |
| Net Income | 27.05M | 45.84M | 17.53M | 14.49M | 33.57M |
Balance Sheet | |||||
| Total Assets | 1.04T | 980.90M | 908.09M | 898.18M | 821.26M |
| Cash, Cash Equivalents and Short-Term Investments | 25.05B | 20.06M | 26.13M | 48.04M | 44.17M |
| Total Debt | 418.66B | 593.01M | 575.83M | 604.13M | 518.17M |
| Total Liabilities | 670.07B | 610.98M | 588.15M | 622.41M | 536.15M |
| Stockholders Equity | 371.18B | 369.92M | 319.94M | 275.78M | 285.11M |
Cash Flow | |||||
| Free Cash Flow | -24.45B | -28.65M | -17.27M | -56.29M | -76.10M |
| Operating Cash Flow | -24.45B | -28.65M | -17.27M | -56.29M | -76.10M |
| Investing Cash Flow | -54.42B | 0.00 | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | 29.44M | 22.58M | -4.65M | 60.16M | 101.80M |
Stellus Capital Technical Analysis
Neutral
12.60
Price Trends
10.12
Negative
11.10
Negative
11.87
Negative
Market Momentum
-0.19
Negative
47.38
Neutral
70.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCM, the sentiment is Neutral. The current price of 12.6 is above the 20-day moving average (MA) of 9.10, above the 50-day MA of 10.12, and above the 200-day MA of 11.87, indicating a neutral trend. The MACD of -0.19 indicates Negative momentum. The RSI at 47.38 is Neutral, neither overbought nor oversold. The STOCH value of 70.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SCM.
Stellus Capital Risk Analysis
Stellus Capital disclosed 92 risk factors in its most recent earnings report. Stellus Capital reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Stellus Capital Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
64 Neutral | $326.49M | 4.69 | ― | 5.39% | ― | ― | |
58 Neutral | $292.53M | 10.64 | 5.42% | 16.61% | -3.09% | 200.66% | |
56 Neutral | $394.02M | 19.71 | 7.50% | 9.31% | 41.12% | -40.68% | |
55 Neutral | $270.08M | 17.24 | 0.03% | 12.83% | 90.34% | -44.25% | |
53 Neutral | $358.02M | -24.53 | -2.75% | 15.77% | -11.01% | -65.56% | |
52 Neutral | $207.31M | 8.14 | 14.02% | 17.28% | 206.13% | 298.86% |
* Financial Sector Average
SCM
Stellus Capital
9.33
-1.49
-13.76%
GLAD
Gladstone Capital
17.44
-4.66
-21.08%
SSSS
SuRo Capital
12.86
8.63
203.88%
PNNT
Pennantpark Investment
4.48
-0.83
-15.57%
TPVG
TriplePoint Venture Growth
5.12
0.13
2.63%
CION
CION Investment Corp
7.09
-0.54
-7.11%
Stellus Capital Corporate Events
Business Operations and StrategyM&A Transactions
Stellus Capital to Be Acquired by P10, Inc.
Positive
Feb 5, 2026
On February 5, 2026, Stellus Capital Management and Stellus Capital Investment Corporation disclosed that Stellus has entered into a definitive agreement to be acquired by P10, Inc., a private markets solutions provider with more than $40 billion ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.