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Stellus Capital (SCM)
NYSE:SCM
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Stellus Capital
(NYSE:SCM)
Rating:64Neutral
Price Target:―
Stellus Capital (SCM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$417.43M
Dividend Yield10.93%
Average Volume (3M)166.08K
Price to Earnings (P/E)10.2
Beta (1Y)0.53
Revenue Growth65.75%
EPS Growth14.28%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength72
IndustryAsset Management
Share Statistics
EPS (TTM)0.34
Shares Outstanding28,416,147
10 Day Avg. Volume157,661
30 Day Avg. Volume166,079
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap2.01
Enterprise Value/Revenue6.96
Enterprise Value/Gross Profit13.10
Enterprise Value/Ebitda6.93
Forecast
1Y Price Target
$14.00Price Target Upside-4.31% Downside
Rating ConsensusHold
Number of Analyst Covering0
Stellus Capital Business Overview & Revenue Model
Company DescriptionStellus Capital Management, LLC (SCM) is an investment firm specializing in providing capital solutions to middle-market companies. Operating primarily in sectors such as business services, industrial, healthcare, and energy, Stellus Capital offers a range of financial products including debt financing and equity investments. The company is focused on delivering tailored financial solutions to support growth, acquisitions, and recapitalizations.
How the Company Makes MoneyStellus Capital makes money through interest income and capital gains generated from its investment portfolio. The company primarily invests in debt and equity securities of middle-market companies, earning interest from loans and potentially benefiting from the appreciation of equity investments. Stellus Capital may also generate fees from managing investment funds and forming strategic partnerships that expand its investment network and enhance deal flow. By leveraging its expertise in credit analysis and risk management, Stellus Capital aims to achieve attractive risk-adjusted returns for its shareholders.
Stellus Capital Earnings Call Summary
Earnings Call Date:Aug 06, 2025
(Q2-2025)
| % Change Since: 4.05%|
Next Earnings Date:Oct 31, 2025
Earnings Call Sentiment Neutral
The earnings call indicates a cautiously optimistic outlook with a stable asset quality and increased investment activity. However, the decrease in net asset value per share, existing nonaccrual loans, and the fact that earnings are not covering dividends pose challenges. The progression towards obtaining an SBIC III license and potential equity realizations are positive indicators for future growth.Q2-2025 Updates
Positive Updates
Stable Asset Quality
84% of the portfolio is rated 1 or 2, indicating on or ahead of plan performance, with no new loans added to the nonaccrual list this quarter.
Increase in Investment Activity
Investment activity has significantly picked up, with $26 million of new fundings since June 30, 2025, and expectations to maintain a portfolio of approximately $1 billion.
Dividend Declaration
Declared a dividend for the third quarter of $0.40 per share, payable monthly, with expectations to maintain the same rate in the fourth quarter.
Potential Equity Realizations
Anticipation of $12 million in equity realization proceeds and approximately $10 million in gains over the next five months.
SBIC III License Progress
Received a greenlight letter from the Small Business Administration for Stellus Capital SBIC III, an important step towards obtaining the license.
Negative Updates
Decrease in Net Asset Value Per Share
Net asset value per share decreased by $0.04 during the quarter due to a reduction in spillover income.
Nonaccrual Loans
Currently, loans to 5 portfolio companies are on nonaccrual, comprising 6.8% of the total cost and 3.8% of the fair value of the total loan portfolio.
Earnings Per Share Not Covering Dividends
Earnings per share have not been covering the dividend for the last few quarters, despite having a spillover of $45 million this year.
Company Guidance
During the conference call held on August 7, 2025, Stellus Capital Investment Corporation provided detailed guidance on its financial performance for the second fiscal quarter ended June 30, 2025. The company reported a GAAP net investment income of $0.34 per share and a core net investment income of $0.35 per share. The net asset value per share declined by $0.04 due to a reduction in spillover income. The investment portfolio was valued at $985.9 million across 112 portfolio companies, slightly down from the previous quarter. Stellus Capital issued approximately 300,000 shares for $3.9 million in proceeds under its ATM program, and year-to-date issuances totaled approximately 900,000 shares for $13.2 million. The company's loans remained secured at 98%, with 91% priced at floating rates. Looking ahead, Stellus Capital anticipates robust investment activity with $26 million of new fundings since June 30, 2025, and projects equity realizations of $12 million in proceeds and approximately $10 million in gains over the next five months. The dividend for the third quarter was declared at $0.40 per share, with expectations to maintain this rate in the fourth quarter, subject to Board approval.Stellus Capital Financial Statement Overview
Summary
Stellus Capital has demonstrated revenue growth potential, but profitability issues and cash flow management challenges persist. The high leverage and inconsistent income generation pose risks to financial stability. Improvements in cost management and cash flow optimization are essential.Income Statement
The income statement shows a volatile revenue trend with a significant increase in the latest year, but consistent profitability issues as indicated by zero net income for the latest period. Gross profit margins were healthy in previous years, with EBIT margins showing strength but no EBITDA data available. Revenue growth has been inconsistent year-over-year.65
Positive
Balance Sheet
The balance sheet reveals a high level of debt with a debt-to-equity ratio of approximately 1.14 for 2023. Stockholders' equity has grown over the years, indicating capital accumulation. However, the equity ratio stands at around 35%, suggesting moderate leverage. Return on equity has fluctuated, with a ROE of 5.48% in 2023, reflecting modest efficiency in using equity to generate profits.70
Positive
Cash Flow
Cash flow statements indicate negative free cash flow and operating cash flow, reflecting cash management challenges. There is no data on free cash flow growth or its relation to net income due to missing values. The company shows reliance on financing activities, which may pose risks in maintaining liquidity.50
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 120.29M | 104.74M | 105.85M | 20.95M | 42.66M | 25.88M |
| Gross Profit | 63.94M | 55.24M | 21.23M | 19.14M | 21.47M | 10.56M |
| EBITDA | 120.94M | 78.72M | 0.00 | 69.24M | 0.00 | 46.53M |
| Net Income | 43.59M | 45.84M | 17.53M | 14.49M | 33.57M | 20.19M |
Balance Sheet | ||||||
| Total Assets | 10.00T> | 980.90M | 908.09M | 898.18M | 821.26M | 674.91M |
| Cash, Cash Equivalents and Short-Term Investments | 39.99T | 20.06M | 26.13M | 48.04M | 44.17M | 18.48M |
| Total Debt | 10.00T> | 593.01M | 575.83M | 604.13M | 518.17M | 393.20M |
| Total Liabilities | 10.00T> | 610.98M | 588.15M | 622.41M | 536.15M | 401.55M |
| Stockholders Equity | 10.00T> | 369.92M | 319.94M | 275.78M | 285.11M | 273.36M |
Cash Flow | ||||||
| Free Cash Flow | -42.09M | -28.65M | -17.27M | -56.29M | -76.10M | -3.49M |
| Operating Cash Flow | -42.09M | -28.65M | -17.27M | -56.29M | -76.10M | -3.49M |
| Investing Cash Flow | 8.84M | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | 37.38M | 22.58M | -4.65M | 60.16M | 101.80M | 5.83M |
Stellus Capital Technical Analysis
Positive
14.63
Price Trends
14.14
Positive
13.43
Positive
13.34
Positive
Market Momentum
0.12
Negative
58.57
Neutral
86.70
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCM, the sentiment is Positive. The current price of 14.63 is above the 20-day moving average (MA) of 14.43, above the 50-day MA of 14.14, and above the 200-day MA of 13.34, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 58.57 is Neutral, neither overbought nor oversold. The STOCH value of 86.70 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $238.25M | 10.11 | 12.44% | 12.16% | ― | ― | |
68 Neutral | $359.54M | 10.33 | 9.27% | 12.17% | -1.64% | 104.07% | |
68 Neutral | $17.53B | 11.77 | 10.43% | 3.83% | 9.84% | 1.31% | |
64 Neutral | $417.43M | 10.19 | 10.88% | 10.93% | 65.75% | 14.28% | |
64 Neutral | $318.23M | 6.04 | 18.20% | 6.32% | 18.36% | 17.28% | |
53 Neutral | $446.55M | 24.75 | 3.46% | 12.79% | 0.36% | -80.23% | |
48 Neutral | $480.58M | 34.18 | 2.89% | 13.46% | -35.46% | -67.15% |
* Financial Sector Average
Performance Comparison
SCM
Stellus Capital
14.63
2.37
19.33%
NEWT
Newtek Business
12.03
0.16
1.35%
PNNT
Pennantpark Investment
7.13
1.02
16.69%
SAR
Saratoga Investment
25.30
5.93
30.61%
LIEN
Chicago Atlantic BDC
11.00
0.74
7.21%
PSBD
Palmer Square Capital BDC Inc.
13.76
-0.73
-5.04%
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.