Stellus Capital Investment (SCM)
NYSE:SCM
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Stellus Capital
(NYSE:SCM)
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Rating:53Neutral
Price Target:
$9.50
▼(-5.09% Downside)
Action:Reiterated
Date:05/14/26
Overall score reflects solid reported profitability but materially weakened by inconsistent cash flow quality and leverage. Technicals are weak with the stock trading below major moving averages and soft momentum. The earnings call was mixed—buyback and stable income help, but elevated non-accruals/NAV decline and guidance that the dividend will likely be reduced constrain the outlook; high yield is therefore less supportive.
Positive Factors
Secured, floating-rate portfolio
A portfolio overwhelmingly composed of senior secured, floating‑rate loans supports durable income and downside protection. Collateral and covenant structures reduce loss severity, while floating coupons help NII keep pace with rising rates, improving long‑term earnings resilience.
Negative Factors
Elevated non‑accruals
Non‑accruals at meaningful levels indicate realized credit stress and reduce current income and NAV. Persistently elevated problem loans increase provisioning and recovery uncertainty, pressure distributable earnings, and can take 12–24 months to resolve, limiting near‑term capital recycling.
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Positive Factors
Negative Factors
Secured, floating-rate portfolio
A portfolio overwhelmingly composed of senior secured, floating‑rate loans supports durable income and downside protection. Collateral and covenant structures reduce loss severity, while floating coupons help NII keep pace with rising rates, improving long‑term earnings resilience.
Read all positive factors
Stellus Capital (SCM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$264.29M
Dividend Yield12.83%
Average Volume (3M)146.87K
Price to Earnings (P/E)40.3
Beta (1Y)0.68
Revenue Growth6.21%
EPS Growth-42.00%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.83
Shares Outstanding28,947,254
10 Day Avg. Volume162,225
30 Day Avg. Volume146,869
Financial Highlights & Ratios
PEG Ratio-0.28
Price to Book (P/B)0.97
Price to Sales (P/S)5.37
P/FCF Ratio-14.71
Enterprise Value/Market Cap1.42M
Enterprise Value/Revenue4.89M
Enterprise Value/Gross Profit8.36M
Enterprise Value/Ebitda11.07M
Forecast
1Y Price Target
$10.00Price Target Upside-0.10% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)1.05
Revenue Forecast (FY)$98.87M
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
SCM makes money primarily from investment income earned on its portfolio of loans and other investments. The core revenue stream is interest income on floating-rate and fixed-rate debt investments (e.g., first-lien/second-lien secured loans and su...
Stellus Capital Earnings Call Summary
Earnings Call Date:May 11, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 12, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: operationally the company shows stable income generation, a largely secured and floating-rate portfolio, prudent leverage, a strategic adviser partnership that could materially expand origination, and an opportunistic $20 million buyback. Offsetting these positives are a quarter NAV decline driven by markdowns on two debt positions, an elevated (and slightly increased) non‑accrual level representing 9.2% of cost / 5.2% of fair value, modest realized gain activity, and management's expectation that the dividend will likely be reduced to align with sustainable NII plus realized gains. Management communicated plans and timelines to reduce non‑accruals and grow the portfolio, but near-term credit resolution and dividend sustainability remain key risks.Positive Updates
Stable Income Generation
GAAP net investment income of $0.26 per share and core net investment income of $0.27 per share for the quarter; total realized income of $0.29 per share (includes $0.75 million gain on one equity position).
Negative Updates
NAV Decline
Net asset value decreased $0.28 per share during the quarter. Components: $0.08 per share of dividend payments that exceeded earnings (spillover from 2025) and $0.20 per share net realized and unrealized loss primarily related to two debt investments.
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Q1-2026 Updates
Positive
Negative
Stable Income Generation
GAAP net investment income of $0.26 per share and core net investment income of $0.27 per share for the quarter; total realized income of $0.29 per share (includes $0.75 million gain on one equity position).
Read all positive updates
Company Guidance
Management guided that the portfolio should finish the quarter roughly flat (currently about $970M across 117 companies; Q1 fair value was $990M across 116) as expected repayments roughly equal new fundings, and reiterated Q1 GAAP NII of $0.26/share (core NII $0.27/share) and total realized income of $0.29/share; they declared a Q2 dividend of $0.34/share (payable monthly) but said dividends will trend toward NII plus realized gains and therefore likely decline from current levels. They estimate $9M of equity realizations for the remainder of the year (about $6M of realized gains), see pipeline spreads near ~5.5% over SOFR, and reaffirm capacity to grow the portfolio by $75–100M (helped by a potential third SBIC license this summer and recycling cash/nonaccruals, noting $1 of realized equity or nonaccrual cash can be reinvested into ~ $3 with leverage). Portfolio metrics: 99% senior secured, 92% floating-rate, average loan ~$9M, largest investment $18.5M, 81% of portfolio rated 1–2 (on/ahead of plan) vs. 19% rated 3+, and 6 nonaccrual loans representing 9.2% of cost and 5.2% of fair value; leverage sits around ~1x regulatory (about <2x including SBA debentures). Finally, management announced a $20M share repurchase authorization while the stock trades at ~25% discount to NAV and said they expect meaningful reduction in nonaccruals toward the end of this year into next year.Stellus Capital Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
58
Neutral
Cash Flow
35
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 77.03M | 66.96M | 82.72M | 53.24M | 45.42M | 61.38M |
| Gross Profit | 45.05M | 32.01M | 51.21M | 21.23M | 20.95M | 42.66M |
| EBITDA | 34.00M | 28.63M | 47.46M | 16.01M | 15.87M | 37.12M |
| Net Income | 23.71M | 27.05M | 45.84M | 17.53M | 14.49M | 33.57M |
Balance Sheet | ||||||
| Total Assets | 10.00T> | 1.04B | 980.90M | 908.09M | 898.18M | 821.26M |
| Cash, Cash Equivalents and Short-Term Investments | 3.38T | 25.05M | 20.06M | 26.13M | 48.04M | 44.17M |
| Total Debt | 10.00T> | 651.82M | 593.01M | 575.83M | 604.13M | 518.17M |
| Total Liabilities | 10.00T> | 670.07M | 610.98M | 588.15M | 622.41M | 536.15M |
| Stockholders Equity | 10.00T> | 371.18M | 369.92M | 319.94M | 275.78M | 285.11M |
Cash Flow | ||||||
| Free Cash Flow | 35.28M | -24.45M | -28.65M | -17.27M | -56.29M | -76.10M |
| Operating Cash Flow | 35.28M | -24.45M | -28.65M | -17.27M | -56.29M | -76.10M |
| Investing Cash Flow | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | -42.79M | 29.44M | 22.58M | -4.65M | 60.16M | 101.80M |
Stellus Capital Technical Analysis
Negative
10.01
Price Trends
9.30
Negative
10.36
Negative
11.22
Negative
Market Momentum
-0.11
Positive
41.50
Neutral
14.94
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCM, the sentiment is Negative. The current price of 10.01 is above the 20-day moving average (MA) of 9.46, above the 50-day MA of 9.30, and below the 200-day MA of 11.22, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 41.50 is Neutral, neither overbought nor oversold. The STOCH value of 14.94 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
70 Outperform | $352.21M | 0.44 | <0.01% | 5.39% | ― | ― | |
69 Neutral | $427.46M | 6.11 | 8.94% | 9.31% | -46.94% | -51.89% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
53 Neutral | $264.29M | 40.25 | ― | 12.83% | 6.21% | -42.00% | |
52 Neutral | $332.09M | -3.77 | -0.13% | 15.77% | -11.90% | 84.61% | |
50 Neutral | $250.08M | -30.83 | 0.01% | 16.61% | 122.81% | 43.00% | |
49 Neutral | $231.41M | 8.18 | 12.12% | 17.28% | 18.91% | 14.29% |
* Financial Sector Average
SCM
Stellus Capital
9.13
-2.58
-22.01%
GLAD
Gladstone Capital
18.92
-4.95
-20.75%
SSSS
SuRo Capital
13.51
7.71
132.89%
PNNT
Pennantpark Investment
3.83
-1.73
-31.15%
TPVG
TriplePoint Venture Growth
5.70
0.03
0.55%
CION
CION Investment Corp
6.67
-1.35
-16.83%
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.