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Stellus Capital
(NYSE:SCM)
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Rating:60Neutral
Price Target:
$7.50
▼(-13.19% Downside)
Action:Reiterated
Date:08/11/26
The score is held back primarily by weaker financial quality signals (multi-year negative operating/free cash flow and elevated leverage, with inconsistent TTM data). Offsetting this are attractive valuation/income characteristics (high dividend yield and moderate P/E) and a cautiously optimistic earnings-call outlook (stable NII and improved NAV), while technicals are moderately supportive but not yet strong on longer-term trend measures.
Positive Factors
Secured, Broad Loan Portfolio
A broad portfolio of secured loans provides structural protection through collateral and reduces reliance on any single borrower. The high floating-rate mix can also help preserve investment yields as short-term rates and funding conditions change over the next several quarters.
Negative Factors
Elevated Nonaccrual Exposure
Elevated nonaccruals indicate that a meaningful portion of invested assets is not producing contracted income and may require restructurings or additional oversight. This can weaken recurring earnings, increase valuation uncertainty, and reduce the reliability of future distributions.
Read all positive and negative factors
Positive Factors
Negative Factors
Secured, Broad Loan Portfolio
A broad portfolio of secured loans provides structural protection through collateral and reduces reliance on any single borrower. The high floating-rate mix can also help preserve investment yields as short-term rates and funding conditions change over the next several quarters.
Read all positive factors
Stellus Capital (SCM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$203.92M
Dividend Yield18.57%
Average Volume (3M)139.30K
Price to Earnings (P/E)7.0
Beta (1Y)0.86
Revenue Growth0.37%
EPS Growth-28.29%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)1.03
Shares Outstanding28,479,937
10 Day Avg. Volume103,202
30 Day Avg. Volume139,304
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 Cap3.45
Enterprise Value/Revenue8.86
Enterprise Value/Gross Profit14.79
Enterprise Value/Ebitda17.50
Forecast
1Y Price Target
$8.00Price Target Upside-7.41% Downside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)1.04
Revenue Forecast (FY)$91.93M
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
Stellus Capital makes money primarily through investment income generated by its portfolio of loans and other investments. The main revenue stream is interest income earned on debt investments (such as first-lien and second-lien secured loans), wh...
Stellus Capital Earnings Call Summary
Earnings Call Date:Aug 10, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 11, 2026
Earnings Call Sentiment Positive
The call presents a cautiously optimistic picture: solid and stable core NII ($0.26/share), a sequential NAV increase (+2%), strategic growth catalysts (adviser integration with Ridgepost, third SBIC license, and an active $20M buyback program), and a clear plan to align dividends with NII. Offsetting these positives are manageable but meaningful credit and portfolio-quality challenges — elevated nonaccruals and ~26% of loans below plan — along with recent net portfolio contraction as repayments outpaced new originations. Management emphasizes active remediation of underperformers and improving origination pipeline, suggesting upside over time but with near-term headwinds.Positive Updates
Stable Quarterly Net Investment Income
GAAP and core net investment income of $0.26 per share in Q2 2026; management set the Q3 dividend to $0.25 per share and expects to be well positioned to earn $0.25 quarterly dividend or more based on current NII trajectory and outlook for short-term rates and spreads.
Negative Updates
Portfolio Size Slightly Declined Sequentially
Investment portfolio fair value decreased from $990 million as of March 31, 2026 to $968 million at quarter end (a decline of ~$22 million, ~2.2% sequentially). Management expects repayments to slightly outpace new fundings for the coming quarter, ending modestly lower than the current level.
Read all updates
Q2-2026 Updates
Positive
Negative
Stable Quarterly Net Investment Income
GAAP and core net investment income of $0.26 per share in Q2 2026; management set the Q3 dividend to $0.25 per share and expects to be well positioned to earn $0.25 quarterly dividend or more based on current NII trajectory and outlook for short-term rates and spreads.
Read all positive updates
Company Guidance
Stellus guided that it has set a Q3 dividend of $0.25 per share and expects to be “well positioned” to earn $0.25 per quarter (or more) based on current NII and the outlook for short‑term rates and spreads; the portfolio stood at roughly $960 million across 117 companies and management expects repayments to slightly outpace new fundings, leaving the quarter-end portfolio marginally below that level, though gross originations are expected to pick up toward year‑end and drive net portfolio growth over the next several quarters. Management reiterated capital actions including a $20 million share‑buyback authorization (467,000 shares repurchased for ~ $4 million so far) and the approval of a third SBIC license enabling up to $125 million of equity and access to $250 million of SBA debentures (with the family debenture cap raised from $350 million to $475 million), which it believes could expand the portfolio by up to ~$100 million (≈10% of current fair value) over time; target leverage remains ~1:1 regulatory (~2:1 GAAP), up from today’s sub‑1:1 level as SBIC debentures ramp.Stellus Capital Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
52
Neutral
Cash Flow
28
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 79.49M | 66.96M | 82.72M | 53.24M | 45.42M | 61.38M |
| Gross Profit | 47.60M | 32.01M | 51.21M | 21.23M | 20.95M | 42.66M |
| EBITDA | 40.24M | 28.63M | 47.46M | 16.01M | 15.87M | 37.12M |
| Net Income | 29.77M | 27.05M | 45.84M | 17.53M | 14.49M | 33.57M |
Balance Sheet | ||||||
| Total Assets | 982.12M | 1.04B | 980.90M | 908.09M | 898.18M | 821.26M |
| Cash, Cash Equivalents and Short-Term Investments | 5.14M | 25.05M | 20.06M | 26.13M | 48.04M | 44.17M |
| Total Debt | 599.42M | 651.82M | 593.01M | 575.83M | 604.13M | 518.17M |
| Total Liabilities | 615.17M | 670.07M | 610.98M | 588.15M | 622.41M | 536.15M |
| Stockholders Equity | 366.96M | 371.18M | 369.92M | 319.94M | 275.78M | 285.11M |
Cash Flow | ||||||
| Free Cash Flow | 56.17T | -24.45M | -28.65M | -17.27M | -56.29M | -76.10M |
| Operating Cash Flow | 56.17T | -24.45M | -28.65M | -17.27M | -56.29M | -76.10M |
| Investing Cash Flow | 45.21T | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | -78.60T | 29.44M | 22.58M | -4.65M | 60.16M | 101.80M |
Stellus Capital Technical Analysis
Negative
8.64
Price Trends
8.04
Negative
8.02
Negative
8.93
Negative
Market Momentum
-0.25
Positive
30.85
Neutral
19.20
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 8.64 is above the 20-day moving average (MA) of 7.57, above the 50-day MA of 8.04, and below the 200-day MA of 8.93, indicating a bearish trend. The MACD of -0.25 indicates Positive momentum. The RSI at 30.85 is Neutral, neither overbought nor oversold. The STOCH value of 19.20 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 |
|---|---|---|---|---|---|---|---|
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $424.98M | 8.79 | 10.19% | 11.06% | -38.83% | -36.61% | |
65 Neutral | $191.34M | 4.75 | 10.97% | 17.36% | 12.61% | -3.62% | |
60 Neutral | $203.92M | 6.97 | 8.05% | 18.57% | 0.37% | -28.29% | |
60 Neutral | $207.64M | 20.14 | <0.01% | 30.33% | 138.32% | -27.91% | |
58 Neutral | $341.47M | 25.70 | 1.84% | 19.64% | 3.63% | ― |
* Financial Sector Average
SCM
Stellus Capital
7.16
-3.52
-32.98%
GLAD
Gladstone Capital
18.81
0.63
3.49%
PNNT
Pennantpark Investment
3.18
-2.14
-40.21%
TPVG
TriplePoint Venture Growth
4.70
0.27
5.98%
CION
CION Investment Corp
6.94
-1.01
-12.73%
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.