Stellus Capital Investment Corporation Common Stock (SCM)

FairStock Score: 57/100 — STEADY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look at Stellus as a lender to middle-market companies, not a wide-moat compounder. Its edge is underwriting and relationships in a niche, but I would not pay a premium for that. The filed record is uneven: net income was $17.5 million in FY2023, $45.8 million in FY2024, then $27.0 million in FY2025. In fiscal Q1 2026, the quarter ended 2026-03-31, net income was just $1.7 million and diluted EPS $0.06; in fiscal Q2 2026, the quarter ended 2026-06-30, net income rebounded to $16.2 million and diluted EPS $0.56. That tells me earnings are volatile and credit-sensitive. Financial health is mixed. FairStock's Piotroski F-Score is 7/9, which is respectable, and trailing free cash flow yield is 22.2%. But debt-to-equity is 1.63 and FairStock's Altman Z-Score is 0.18, a warning sign for a leveraged lender. Valuation is the attraction. At the 2026-10-13 close of $7.11, FairStock calculates a P/E of 6.90, P/B of 0.56, dividend yield of 16.83%, and a Graham Number of $17.22, implying a 58.71% margin of safety. FairStock also classifies it as an ASSET PLAY because it trades at 0.56× book value. The 16.83% yield and 0.67 beta may draw income investors, but a high yield can signal perceived risk. If credit holds and fiscal Q2 2026 profitability persists, the discount could narrow; if credit sours, book value and the dividend are vulnerable. I want a margin of safety, not just a low multiple.

In plain English: Stellus Capital lends money to middle-sized private companies in the U.S. and Canada, often taking loans plus a small ownership stake. Its recent quarter showed a solid profit, but yearly results have bounced around and the company relies heavily on borrowed money. At the 2026-10-13 price, the shares look cheap compared with the company’s accounting value and earnings, though that low price may reflect real lending risks.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer