Summary
SCM Chart
Stellus Capital: Q3 Reveals That Distributions Continue To Exceed Earnings
Stellus Capital Investment Corporation remains a sell due to poor earnings, weak dividend coverage, and a declining net asset value (NAV). SCM's distributions continue to exceed earnings, with a high 13.7% yield but unsustainable payout, risking further NAV erosion. Despite trading at a 10.96% discount to NAV, SCM's high non-accruals and insufficient new investment activity limit its growth potential.
Stellus Capital Investment Corporation (SCM) Q3 2025 Earnings Call Transcript
Stellus Capital Investment Corporation ( SCM ) Q3 2025 Earnings Call November 12, 2025 11:00 AM EST Company Participants Robert Ladd - Chairman, President & CEO W. Huskinson - CFO, Treasurer, Secretary & Chief Compliance Officer Conference Call Participants Erik Zwick - Lucid Capital Markets, LLC, Research Division Christopher Nolan - Ladenburg Thalmann & Co. Inc., Research Division Robert Dodd - Raymond James & Associates, Inc., Research Division Presentation Operator Good morning, ladies and gentlemen, and thank you for standing by.
Stellus Capital (SCM) Q3 Earnings and Revenues Top Estimates
Stellus Capital (SCM) came out with quarterly earnings of $0.34 per share, beating the Zacks Consensus Estimate of $0.3 per share. This compares to earnings of $0.4 per share a year ago.
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Stellus Capital Investment Corporation Profile
| Capital Markets Industry | Financials Sector | Robert Thomsen Ladd CEO | NYSE Exchange | 858568108 CUSIP |
| US Country | - Employees | 31 Dec 2025 Last Dividend | 13 Jan 2014 Last Split | 8 Nov 2012 IPO Date |
Overview
Stellus Capital Investment Corporation is a business development company that focuses on providing specialized investment solutions to private middle-market companies. With a strategy that emphasizes investing in a diverse range of sectors, Stellus operates primarily within the United States and Canada. The company leverages a comprehensive investment approach, offering financial products ranging from first lien and second lien loans to unitranche and mezzanine debt financing. These financial tools are designed to meet the varied needs of companies seeking growth or acquisition financing. Targeting enterprises with an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) between $5 million and $50 million, Stellus Capital Investment Corporation aligns with businesses poised for growth, providing them not only with capital but often with strategic equity investments as well.
Products and Services
Stellus Capital Investment Corporation provides a suite of investment solutions tailored to the needs of middle-market companies. This suite includes:
- First Lien Debt Financing: This product provides companies with a primary secured loan. As a first lien lender, Stellus Capital holds a preferential position in the event of a borrower's liquidation, ensuring a higher level of security for its investment.
- Second Lien Debt Financing: Offering a secondary layer of secured financing, this option sits behind the first lien debt and is typically used by companies looking to secure additional capital with existing first lien debt in place.
- Unitranche Debt Financing: A hybrid loan that combines the characteristics of first lien and junior debt into a single debt instrument. This simplifies the capital structure and provides a straightforward financing solution for companies.
- Mezzanine Debt Financing: This subordinated debt option is less secured than the first or second lien debt but offers the potential for higher returns through its equity component. Mezzanine financing is often utilized by companies aiming for expansion or acquisitions without diluting ownership.
Alongside these debt financing options, Stellus often makes corresponding equity investments in its client companies, aligning its interests with those of the business owners and promoting mutual growth. This comprehensive approach to investment underscores Stellus Capital Investment Corporation's commitment to fostering the expansion and success of middle-market companies across North America.
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