Stellus Capital Investment Corporation
- Open
- 8.48
- Day high
- 8.65
- Day low
- 8.44
- Prev close
- 8.42
- Volume
- 105K
- Mkt cap
- $247M
- P/E (TTM)
- 10.3
- EPS (TTM)
- $0.83
- P/B
- 0.7
- P/S
- 3.2
- Yield
- 17.31%
- Per share
- $1.48
- ▲Insiders net buying $97K over the last 3 months (3 open-market buys, 0 sales)
- 🏛Institutions mixed (13F)
Stellus Capital Investment Corporation (SCM) is a Financial Services company listed on NYSE. The stock is down 40% over the past year. Over the trailing 3 months, insiders filed 3 open-market buys and 0 sales (SEC Form 4).
Stellus Capital Investment Corporation (SCM) financials & analyst ratings
Fundamentals (TTM)
Analyst consensus · 2 analysts
Source: exchange market data + company filings. Figures are trailing-twelve-month or as most recently reported. For informational purposes only — not investment advice.
SCM earnings date, history & EPS estimates
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| May 12, 2026 | $0.27 | $0.27 | +0.0% | $23M | -6.1% |
| Mar 12, 2026 | $0.29 | $0.29 | -1.6% | $31M | +18.7% |
| Aug 6, 2025 | $0.35 | $0.35 | +0.0% | $25M | -5.8% |
| Mar 4, 2025 | $0.41 | $0.37 | -9.8% | $44M | +65.5% |
| Nov 8, 2024 | $0.46 | $0.40 | -13.0% | $26498.3B | +96885673.3% |
| May 9, 2024 | $0.45 | $0.42 | -6.7% | $6M | -78.9% |
| Mar 4, 2024 | $0.45 | $0.49 | +8.9% | $10M | -63.8% |
| Feb 28, 2023 | $0.39 | $0.44 | +12.8% | $5M | -75.4% |
| Nov 3, 2022 | $0.31 | $0.35 | +12.9% | $6M | -68.1% |
| Aug 3, 2022 | $0.28 | $0.29 | +3.6% | $3M | -80.6% |
| Mar 1, 2022 | $0.29 | $0.33 | +13.8% | $13M | -21.2% |
| Oct 28, 2021 | $0.30 | $0.31 | +3.3% | $16M | -1.1% |
SCM insider trading activity (SEC Form 4)
| Date | Insider | Type | Shares | Price |
|---|---|---|---|---|
| Jun 25, 2026 | Arnoult J Timdirector | Buy | 1,000 | $9.27 |
| Jun 25, 2026 | Arnoult J Timdirector | Buy | 9,000 | $9.05 |
| Jun 25, 2026 | Arnoult J Timdirector | Buy | 700 | $8.29 |
| Mar 17, 2026 | Bilger Bruce Rdirector | Buy | 19,417 | $8.76 |
| Mar 17, 2026 | Ladd Robert T.director, officer: President and CEO | Buy | 1,700 | $8.45 |
| Mar 17, 2026 | Ladd Robert T.director, officer: President and CEO | Buy | 35,000 | $8.70 |
| Mar 17, 2026 | Huskinson W. Toddofficer: CFO and CCO | Buy | 5,700 | $8.79 |
| Mar 17, 2026 | Bilger Bruce Rdirector | Buy | 4,600 | $8.75 |
| Mar 17, 2026 | Bilger Bruce Rdirector | Buy | 11,111 | $8.73 |
| Mar 17, 2026 | Bilger Bruce Rdirector | Buy | 10,362 | $8.70 |
| Jun 22, 2022 | Bilger Bruce Rdirector: | Buy | 17,543 | $11.35 |
| Jun 21, 2022 | D'Angelo Deandirector: | Buy | 2,500 | $11.38 |
| Jun 21, 2022 | Ladd Robert T.officer: President and CEO | Buy | 1,000 | $11.47 |
| May 18, 2022 | Ladd Robert T.officer: President and CEO | Buy | 30 | $12.70 |
| Dec 17, 2021 | D'Angelo Deandirector | Buy | 1,600 | $12.66 |
Source: SCM SEC Form 4 filings, latest Jun 25, 2026. For informational purposes only — not investment advice.
See the full SCM insider & 13F page →Stellus Capital Investment Corporation company profile
Overview
Stellus Capital Investment Corporation (NASDAQ:SCM) is a business development company founded in 2012 that specializes in providing debt and equity financing to private middle-market companies across the United States and Canada. As a publicly traded investment firm, Stellus operates under the Investment Company Act of 1940 and focuses on companies with annual earnings before interest, taxes, depreciation, and amortization (EBITDA) between $5 million and $50 million. The company has grown its investment portfolio from approximately $773 million in 2022 to over $1 billion by late 2024, establishing itself as a significant player in the middle-market lending space.
Business
Stellus Capital operates as a business development company (BDC), which is a specialized type of investment vehicle that provides capital to small and medium-sized businesses that may have difficulty accessing traditional bank financing or public capital markets. The middle-market lending industry serves as a crucial bridge between traditional bank lending and large institutional financing, targeting companies that are too large for community banks but too small for major investment banks. The company's core business involves originating and managing a diversified portfolio of debt investments, primarily in the form of first lien loans, second lien loans, unitranche financing, and mezzanine debt. First lien loans are senior secured debt that has the highest priority in case of bankruptcy, while unitranche loans combine senior and subordinated debt into a single facility. Mezzanine financing typically includes both debt and equity components, offering higher returns but with increased risk. Stellus typically invests between $5 million and $25 million per transaction, with an average loan size of approximately $9-10 million per company. The company's portfolio consists of approximately 98% secured loans, with 91-95% priced at floating interest rates, which provides natural protection against rising interest rate environments. About 83-87% of portfolio companies are backed by private equity sponsors, which provides additional oversight and potential exit strategies for investments. The company also maintains equity co-investments across its portfolio companies, holding equity stakes in approximately 92 companies with a total cost basis of around $59 million. These equity positions provide potential upside participation when portfolio companies are sold or refinanced.
Revenue model
Stellus generates revenue primarily through interest income from its loan portfolio and dividend income from equity investments. The company's floating-rate loan structure means that approximately 91-95% of its interest income adjusts with market interest rates, particularly the Secured Overnight Financing Rate (SOFR), providing natural hedge against rising rate environments. The company's paying customers are middle-market companies seeking debt financing, typically ranging from $5 million to $50 million in annual EBITDA. These borrowers often include companies undergoing leveraged buyouts, growth capital needs, acquisition financing, or refinancing existing debt. Most portfolio companies (approximately 83%) are backed by private equity firms, which serve as sponsors and provide additional credibility and oversight. Revenue generation is also supplemented by fee income from loan origination, structuring, and portfolio management activities. Additionally, the company realizes gains from equity co-investments when portfolio companies are sold or undergo liquidity events. Several factors influence Stellus's profitability margins. Interest rate movements significantly impact earnings since the majority of the loan portfolio is floating-rate while much of the company's debt financing is fixed-rate, creating positive leverage in rising rate environments. Credit quality and default rates directly affect net investment income, with the company maintaining 5-7 loans on non-accrual status representing 2-7% of portfolio fair value. Competition in middle-market lending can compress loan spreads and reduce origination opportunities. Economic conditions affect both borrower performance and the availability of new investment opportunities, while regulatory changes affecting BDCs can impact operational flexibility and capital requirements. The company's leverage strategy also affects returns, with management targeting approximately 1:1 regulatory leverage ratio, allowing them to amplify returns on equity while managing risk exposure.
Competitive moat
Stellus Capital operates in the competitive middle-market lending space where its moat is relatively modest but defensible through several key factors. The company's primary competitive advantage lies in its established origination network and relationships with private equity sponsors, which provide a consistent deal flow pipeline. With 83% of portfolio companies backed by private equity firms, these sponsor relationships create recurring business opportunities and referrals. The company's specialized expertise in middle-market lending and its focus on the $5-50 million EBITDA segment provides some differentiation, as this market requires specific underwriting capabilities and industry knowledge that takes time to develop. Stellus has built institutional knowledge around credit analysis, structuring, and portfolio management in this niche. However, the middle-market lending industry faces significant competitive pressures. Large banks, other BDCs, private credit funds, and direct lenders all compete for similar deal flow, which can compress spreads and reduce investment opportunities. The company's relatively modest size (approximately $1 billion portfolio) compared to larger competitors like Ares Capital or Blackstone Credit may limit its ability to compete for larger transactions or offer more competitive terms. Regulatory advantages as a BDC provide some structural benefits, including tax pass-through treatment and access to SBA lending programs, but these advantages are available to other BDCs as well. The company's floating-rate loan portfolio provides some protection in rising rate environments, but this structure is widely adopted across the industry. The most significant competitive threat comes from larger private credit managers with greater capital resources and broader origination capabilities, as well as potential market disruption from changes in banking regulations that might allow traditional banks to compete more aggressively in this space. The company's moat is therefore best characterized as narrow but sustainable through consistent execution and relationship management.
Risks & safety
Stellus Capital presents a moderate margin of safety with reasonable financial stability but some structural risks inherent to the BDC model. **Liquidity and Solvency:** • Strong current ratio of 3.48x with $10.9 million in cash and short-term investments • Total debt-to-equity ratio of 1.67x, which is manageable but represents meaningful leverage • Access to $315 million credit facility with substantial unused capacity • No immediate solvency concerns given asset coverage ratios **Valuation Metrics:** • Trading at 1.04x book value, representing modest premium to net asset value • Price-to-earnings ratio not meaningful due to BDC structure and dividend requirements • Net asset value per share has remained relatively stable around $12-13 range **Credit and Portfolio Quality:** • 5-7 portfolio companies on non-accrual representing 4-7% of portfolio fair value • 98% of loans secured, providing downside protection • 52% of portfolio rated as performing on or ahead of plan • 21% of portfolio marked in underperforming categories **Other Considerations:** • BDC structure requires distribution of 90% of taxable income, limiting retained capital • Interest rate sensitivity provides both opportunity and risk • Spillover income of $45 million provides dividend coverage buffer • Regulatory compliance requirements and potential fee waivers create operational complexity
Recent development
Over the past few years, Stellus Capital has executed several strategic initiatives to expand its platform and enhance shareholder returns. The company has significantly grown its investment portfolio from approximately $773 million in 2022 to over $1 billion by late 2024, representing the first time in company history it reached this milestone. This growth has been achieved through consistent origination activity, investing $46-76 million per quarter in new and existing portfolio companies. The company has enhanced its capital structure through multiple financing initiatives, including increasing its bank credit facility from $260 million to $315 million and issuing $75 million in 7.25% notes due April 2030. Management has also utilized an at-the-market (ATM) equity program, issuing shares strategically to fund growth while maintaining appropriate leverage ratios. Dividend strategy has been a key focus, with the company increasing its regular quarterly dividend from $0.28 to $0.40 per share and transitioning to monthly dividend payments to provide more consistent income to shareholders. The company maintains substantial spillover income (approximately $45 million) to support dividend payments during periods when current earnings may not fully cover distributions. Stellus has expanded its Small Business Investment Company (SBIC) platform, receiving approval for Stellus Capital SBIC III, which provides access to government-backed leverage and additional investment capacity. The company has also focused on equity co-investment opportunities, building a portfolio of equity stakes across 92 companies with expectations of meaningful equity gains through exits and refinancings. Management has positioned the company to benefit from interest rate environments by maintaining 91-95% of the loan portfolio at floating rates while keeping much of its debt financing at fixed rates, creating positive operating leverage when rates rise.
SCM company profile · for informational purposes only — not investment advice.
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