Stellus Capital Investment Corp (SCA) Stock Analysis
Stellus Capital Investment Corp
▾ What's in the 42/100 risk score? (higher = riskier)
Contributions (weight × component score) sum to the total. This near-term score now includes fundamental health (leverage, FCF trend). See the Financial Health section for the full balance-sheet read.
How to read SCA
We are not publishing an intrinsic value for this one — the section below says exactly why. Everything on this page that comes straight from the filings and the tape is still here; treat the missing valuation as a known gap, not as a verdict on the business.
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Reported earnings & margins ↓
What the company actually reported — unaffected by the valuation being held.
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Balance sheet & book value ↓
Assets, liabilities and equity as filed.
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Who's selling & betting against it ↓
Insider and short-interest behaviour needs no valuation model.
SCA's SEC filings give us limited machine-readable financials — common for some foreign or newly-listed filers that report under IFRS or file abbreviated statements. We can't run a full valuation on a partial dataset.
What to use instead: What we have parsed is shown below. As more complete filings arrive (or IFRS support lands), the valuation will populate.
How does SCA stack up against its closest peers?
We take the 8 same-industry companies most similar to SCA (similar size) and check what investors are paying for each dollar of their revenue (or profits). If SCA is much more expensive on the same yardstick, that's a red flag — unless you have a specific reason it deserves a premium. For a leveraged business, FCF yield (in the table) is usually more reliable than EV/Sales, because revenue multiples ignore differences in margins and debt.
▾ What's "EV / Sales" in plain English?
EV (Enterprise Value) = market cap + total debt − cash. It's "what you'd pay to buy the entire company outright" — you pay the market cap to shareholders and take over their debt, but you keep their cash. EV is fairer than market cap alone because it includes the debt the new owner inherits.
EV / Sales = EV ÷ annual revenue. So "2.5×" means investors pay $2.50 of enterprise value per $1 of yearly sales. Higher = market is paying more per dollar of sales (usually because they expect future growth or fat margins).
p25 / median / p75 are the 25th, 50th (middle), and 75th percentile of the peers' multiples. Half the peers fall between p25 and p75. The median (p50) is the typical peer — that's the benchmark we compare to.
Bold middle number = median peer. Half the peers trade above it, half below. Computed over 8 same-industry peers; implausible multiples excluded.
⚠️ Important caveat: peer multiples only work if the peers are genuinely comparable. Always check the peer list below — if the auto-picker grabbed micro-caps or unrelated businesses, the comparison is noise. A medical-device giant priced against tiny biotech startups won't produce a useful signal.
▾ View peer list (8)
| Ticker | Company | Industry | Mcap | EV/Sales | EV/GP | EV/EBIT | FCF Yield |
|---|---|---|---|---|---|---|---|
| SLRC | SLR Investment Corp. | Unknown | $714M | — | — | — | — |
| SSSSL | SURO CAPITAL CORP. | Unknown | $655M | — | — | — | 4.7% |
| WHFCL | WhiteHorse Finance, Inc. | Unknown | $549M | — | — | — | 14.0% |
| RWAYI | Runway Growth Finance Corp. | Unknown | $1.0B | — | — | — | 13.6% |
| RWAYL | Runway Growth Finance Corp. | Unknown | $1.1B | — | — | — | 13.3% |
| SAJ | SARATOGA INVESTMENT CORP. | Unknown | $412M | — | — | — | — |
| SAZ | SARATOGA INVESTMENT CORP. | Unknown | $411M | — | — | — | — |
| SAY | SARATOGA INVESTMENT CORP. | Unknown | $411M | — | — | — | — |
Quality & solvency checks
Cheap stocks can be cheap for a reason. These screens warn when a low valuation comes paired with structural fragility.
Why it matters: Cheap-looking stocks (low P/E or P/B) often have low Z-scores because the market knows the company is dying. Z-score warns you before you fall into a value trap.
Reference: > 3.0 = safe zone · 1.81–3.0 = grey zone · < 1.81 = distress zone
Full explanation →
The Z-score needs working capital, retained earnings, EBIT, sales and total assets from the latest balance sheet, and at least one of those isn't reported in machine-readable form here — common for foreign private issuers. We leave it blank rather than compute a distress verdict from an estimated input. It doesn't affect the reported figures in the financial tables below.
▾ The checks — what passed, what didn't (and what we couldn't measure)
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✓ Positive net incomeNet income $27.0M in FY2025.
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✗ Positive operating cash flowOperating cash flow -$24.4M (was -$28.6M the prior year).Why this matters: Profit can be an accounting figure; cash from running the business is harder to fake. Negative operating cash flow means the core business consumes cash and must be funded externally.
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✗ Cash flow backs up reported profitOperating cash flow -$24.4M vs net income $27.0M.Why this matters: When cash generated exceeds reported earnings, profits are high-quality (not propped up by accruals or one-time items).
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✗ Return on assets improvingReturn on assets 2.6% vs 4.7% a year ago.Why this matters: Is the company squeezing more profit out of each dollar of assets than last year? Rising = getting more efficient; falling = the opposite.
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✓ Debt load (vs assets)The filing reports no interest-bearing debt in either year (total assets $1,041.3M).
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· Short-term liquidity (current ratio) (n/a — data not reported; not scored)
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✗ Share count (dilution)Share count rose 10.8% (25.6M → 28.4M year-over-year).Why this matters: Issuing lots of new shares splits the pie into more pieces, shrinking your slice. Stable or falling share count protects existing owners.
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· Pricing power (gross margin) (n/a — data not reported; not scored)
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· Sales per asset (asset turnover) (n/a — data not reported; not scored)
Missing data is never counted as a pass or a fail — it's shown as n/a and excluded from the denominator. Each check compares the company against its own prior year.
A standard discounted cash flowDCF — Discounted Cash Flow — sums up all future cash a business will produce, adjusted for the fact that future dollars are worth less than dollars today.
Why it matters: It is the most fundamentally honest valuation method when applicable — but only works for companies with predictable, positive cash flow.
Reference: Best for: mature, profitable businesses. Fails for: pre-profit growth, banks, REITs.
Full explanation → (DCF) valuation is not meaningful for Stellus Capital Investment Corp (SCA) because its operating cash flow has been negative in the latest period and for all of the past five years, as indicated by the health signals. This suggests a cash-burning operational profile that makes traditional cash flow projections unreliable. Investors are likely focused on the company's ability to generate positive operating cash flow consistently and its net income, which has been positive for the last five years. The primary quantifiable risk is the persistent negative operating cash flow, which could necessitate further capital raises.
As of 3 months ago
Anatomy of a share
What you're buying per share. Bars are at the same scale so you can see the relative size of revenue, costs, cash flow, and debt — not just read them in a table.
What's free cash flow / what do these mean?
Revenue per share — how much the business earns from customers, divided by the number of shares outstanding. Top of the income statement.
Earnings per share — profit left after operating costs, interest, and taxes, per share. Two versions appear on this page and are not interchangeable: GAAP diluted EPS uses the company's weighted-average diluted share count during the reporting period (this is the "earnings" in "price-to-earnings"); net income per current share divides annual net income by today's share count. They differ whenever the share count has changed.
Owner-earnings free cash flow per share — the cash the business produces for shareholders. Savng's owner-earnings FCF subtracts capital expenditures and stock-based compensation from operating cash flow (SBC is a real dilution cost even though it's non-cash). This is deliberately more conservative than "standard" FCF, which subtracts only capital expenditures — so our figure is lower than the headline FCF you'll see elsewhere. FCF funds dividends, buybacks, debt repayment, and acquisitions; a company can report positive earnings yet negative FCF.
Debt per share — total interest-bearing borrowings divided by shares. High debt-per-share next to thin FCF-per-share is a fragility signal.
What you actually need to decide
Every stock price is a disagreement. Here's the single thing that must go right for the bulls, the single thing that breaks the thesis, and the concrete signposts to watch so you can update your view as real results arrive.
- Improvement in operating cash flow in upcoming quarters
- Growth in net investment income per share
- Stability or improvement in portfolio credit quality
The trend, in plain numbers (FY2024 → FY2025, latest reported)
Straight from the financial statements — no model, no opinion. For a small or unprofitable company, the direction of these numbers usually tells you more than any single valuation.
- Free cash flow is negative at -$24.4M — the cash burn narrowed vs last year.
- Net income fell -41% to $27.0M.
Management & Leadership
Robert T. Ladd serves as the Chief Executive Officer and Chairman of Stellus Capital Investment Corp, a role he has held since the company's inception. He is also a founding partner of Stellus Capital Management, LLC. W. Todd Huskinson is the Chief Financial Officer and Chief Compliance Officer, bringing extensive experience in financial management to the firm.
What They Make
Stellus Capital Investment Corp is a business development company (BDC) that provides debt financing to middle-market companies. It primarily offers first lien, second lien, and unitranche debt, as well as equity co-investments to support growth, acquisitions, and recapitalizations.
End Markets
Revenue Drivers
Why Is It Priced Like This?
Why Customers Pay
What we use instead: earnings (P/E, EV/EBIT), book value (P/B) — computed from the figures this company does report, shown in the sections below. Those numbers are unaffected by the missing cash-flow data.
The market is likely pricing SCA based on its consistent net income profitability (positive 5/5 years) despite negative operating cash flow. The market may be assigning value to the company's ability to generate future interest and fee income from its investment portfolio, which is not fully captured by a backward-looking cash flow model. Investors are likely assessing the quality and performance of its loan portfolio and the potential for future capital appreciation from its equity co-investments.
Business Model & Valuation
How They Make Money
The company funds its investments through a combination of debt and equity, and its dividend policy is typically tied to its net investment income, though specific rates are not provided in the FLAGS.
Growth / Revenue DCF
Negative free cash flow: revenue/margin growth model used - standard FCF DCF is unreliable for companies still scaling.
Show advanced inputs
| Revenue Growth | 15.0% |
What this model does NOT do: this is a consolidated owner-earnings FCF model. Standalone segment assumptions: none. It does not project its revenue segments independently; their combined effect is embedded in the historical revenue and cash-flow trend the model extrapolates. The calculator above can only approximate a segment's impact through the single consolidated growth rate — it cannot model any one line separately. For a true segment-level view, build a separate model from the company's segment disclosures.
Maturity & Competitive Position
Moat Signals
The company has demonstrated positive net income for the last five years, indicating consistent profitability.
Geography & Markets
Stellus Capital Investment Corp primarily focuses on investments in U.S.-based middle-market companies. Geographic mix data is not available from current data sources to specify regional concentrations beyond the domestic market.
Geographic Risks
Market Signals
These are timing signals, not value signals — they describe the stock's recent price behavior, not what the business is worth. Use them for the "the thesis looks good, but is now the moment?" question. Each tile below explains what it's saying.
Technicals describe price, not the business. A great company can have a "bearish" tape (a buying chance) and a weak one a "bullish" tape (a trap). Pair these with the valuation and health sections above.
QUALITY
Data Quality & Risk Flags (4 notes — click to expand/collapse)
Guardrail Notes (4)
- FCF negative: revenue/margin growth model projects future cash flows from revenue trajectory.
- INVARIANT: weighted IV is non-positive. Model may not be appropriate.
- Model implies no positive equity value under these assumptions. Valuation is speculative/low-confidence.
- Illiquidity discount 7% applied (small/micro-cap — harder to exit, demand a margin).
FINANCIALS
Financial Statements (5-year tables — click to expand)
From Stellus Capital Investment Corp's SEC filings (EDGAR).
Income (5yr)
| Year | Revenue | Net Income | EPS |
|---|---|---|---|
| 2025 | — | 27.0M | $0.95 |
| 2024 | — | 45.8M | $1.79 |
| 2023 | — | 17.5M | $0.80 |
| 2022 | — | 14.5M | $0.74 |
| 2021 | — | 33.6M | $1.72 |
Cash Flow (5yr)
Capital expenditure isn't tagged in this filer's machine-readable data (the CapEx column shows "—"). The free-cash-flow column is therefore operating cash flow less stock-based compensation only — an upper bound on true owner earnings, not the real figure. Companies that report capex under a custom label (some large IFRS filers do) look better here than they are.
| Year | Operating CF | CapEx | − SBC & adj. | Free Cash Flow |
|---|---|---|---|---|
| 2025 | -24.4M | — | — | -24.4M |
| 2024 | -28.6M | — | — | -28.6M |
| 2023 | -17.3M | — | — | -17.3M |
| 2022 | -56.3M | — | — | -56.3M |
| 2021 | -76.1M | — | — | -76.1M |
How we define FCF: operating cash flow − capital expenditure − stock-based compensation (owner-earnings basis — SBC is a real cost to shareholders even though it's non-cash). This is the same owner-earnings FCF definition the valuation model uses, though the DCF's starting value is a projected from revenue × terminal margin, not this single year.
Balance Sheet
| Total Assets | 1.0B |
| Total Liabilities | 670.1M |
| Equity | 371.2M |