Stellus Capital Investment (SCM)
NYSE:SCM
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Stellus Capital
(NYSE:SCM)
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Rating:56Neutral
Price Target:
$9.00
▼(-10.09% Downside)
Action:Reiterated
Date:06/18/26
The score is held back primarily by inconsistent cash-flow generation and meaningful leverage, alongside weak technical momentum (price below key moving averages and negative MACD). These are partially offset by attractive valuation metrics (low P/E and very high yield) and a mixed but constructive earnings-call outlook that includes a buyback and portfolio growth capacity, tempered by elevated non-accruals, NAV pressure, and likely dividend reduction.
Positive Factors
Secured, floating-rate portfolio
A predominantly senior‑secured, floating‑rate loan book provides durable downside protection and income resilience as rates change. Collateral and covenant structures plus floating coupons support stable interest income and lower loss severity versus unsecured credit over the medium term.
Negative Factors
Elevated non‑accruals
A meaningful non‑accrual level signals credit stress that can impair recurring income and capital. Resolution is expected to be gradual, so provisioning, slower repayments, or realized losses may persist for 12–24 months, limiting sustainable NII and constraining dividend and capital return capacity.
Read all positive and negative factors
Positive Factors
Negative Factors
Secured, floating-rate portfolio
A predominantly senior‑secured, floating‑rate loan book provides durable downside protection and income resilience as rates change. Collateral and covenant structures plus floating coupons support stable interest income and lower loss severity versus unsecured credit over the medium term.
Read all positive factors
Stellus Capital (SCM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$241.71M
Dividend Yield12.83%
Average Volume (3M)174.05K
Price to Earnings (P/E)10.2
Beta (1Y)0.67
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. Volume172,994
30 Day Avg. Volume174,050
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 Cap3.56
Enterprise Value/Revenue11.16
Enterprise Value/Gross Profit19.08
Enterprise Value/Ebitda25.28
Forecast
1Y Price Target
$11.00Price Target Upside9.89% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)1.05
Revenue Forecast (FY)$95.70M
Stellus Capital Business Overview & Revenue Model
Company Description
Stellus Capital Investment Corporation operates as a Business Development Company (BDC), allocating capital to privately-held, mid-sized enterprises. The firm employs various financing structures, including senior secured (first lien), junior secu...
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.
Read all updates
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 | 1.00B | 1.04B | 980.90M | 908.09M | 898.18M | 821.26M |
| Cash, Cash Equivalents and Short-Term Investments | 158.96M | 25.05M | 20.06M | 26.13M | 48.04M | 44.17M |
| Total Debt | 618.19M | 651.82M | 593.01M | 575.83M | 604.13M | 518.17M |
| Total Liabilities | 638.28M | 670.07M | 610.98M | 588.15M | 622.41M | 536.15M |
| Stockholders Equity | 363.00M | 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
9.17
Negative
9.56
Negative
10.67
Negative
Market Momentum
-0.16
Positive
33.90
Neutral
9.64
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 8.85, above the 50-day MA of 9.17, and below the 200-day MA of 10.67, indicating a bearish trend. The MACD of -0.16 indicates Positive momentum. The RSI at 33.90 is Neutral, neither overbought nor oversold. The STOCH value of 9.64 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 | $344.39M | 1.63 | 80.64% | 5.39% | ― | ― | |
68 Neutral | $422.26M | 9.61 | 8.94% | 9.31% | -46.94% | -51.89% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
56 Neutral | $241.71M | 10.20 | 6.38% | 12.83% | 6.21% | -42.00% | |
52 Neutral | $326.12M | -347.72 | -0.13% | 15.77% | -11.90% | 84.61% | |
50 Neutral | $223.97M | 15.93 | 0.01% | 16.61% | 122.81% | 43.00% | |
49 Neutral | $202.99M | 4.73 | 12.12% | 17.28% | 18.91% | 14.29% |
* Financial Sector Average
SCM
Stellus Capital
8.35
-3.75
-31.00%
GLAD
Gladstone Capital
18.69
-5.65
-23.22%
SSSS
SuRo Capital
13.21
6.28
90.48%
PNNT
Pennantpark Investment
3.43
-2.25
-39.61%
TPVG
TriplePoint Venture Growth
5.00
-0.69
-12.10%
CION
CION Investment Corp
6.55
-1.41
-17.73%
Stellus Capital Corporate Events
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Stellus Capital Stockholders Approve Governance and Advisory Changes
Positive
Jun 17, 2026
Stellus Capital Investment Corporation reported the results of its Annual Meeting of Stockholders held on June 16, 2026, where 15,974,326 of 28,947,255 eligible shares were represented in person or by proxy. Stockholders elected Bruce R. Bilger to...
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.