Stellus Capital Investment (NYSE:SCM – Get Free Report) and Crescent Capital BDC (NASDAQ:CCAP – Get Free Report) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.
Institutional and Insider Ownership
13.2% of Stellus Capital Investment shares are held by institutional investors. Comparatively, 49.5% of Crescent Capital BDC shares are held by institutional investors. 4.0% of Stellus Capital Investment shares are held by insiders. Comparatively, 1.1% of Crescent Capital BDC shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Stellus Capital Investment and Crescent Capital BDC”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Stellus Capital Investment | $104.74 million | 3.81 | $45.85 million | $1.45 | 9.68 |
| Crescent Capital BDC | $197.36 million | N/A | $73.65 million | $1.20 | 13.11 |
Crescent Capital BDC has higher revenue and earnings than Stellus Capital Investment. Stellus Capital Investment is trading at a lower price-to-earnings ratio than Crescent Capital BDC, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Stellus Capital Investment has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Crescent Capital BDC has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.
Profitability
This table compares Stellus Capital Investment and Crescent Capital BDC’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Stellus Capital Investment | 38.24% | 11.06% | 4.12% |
| Crescent Capital BDC | 24.12% | 10.55% | 4.68% |
Analyst Ratings
This is a summary of recent recommendations for Stellus Capital Investment and Crescent Capital BDC, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Stellus Capital Investment | 0 | 1 | 0 | 0 | 2.00 |
| Crescent Capital BDC | 0 | 1 | 1 | 1 | 3.00 |
Stellus Capital Investment presently has a consensus target price of $13.00, suggesting a potential downside of 7.34%. Crescent Capital BDC has a consensus target price of $17.25, suggesting a potential upside of 9.66%. Given Crescent Capital BDC’s stronger consensus rating and higher probable upside, analysts clearly believe Crescent Capital BDC is more favorable than Stellus Capital Investment.
Dividends
Stellus Capital Investment pays an annual dividend of $1.60 per share and has a dividend yield of 11.4%. Crescent Capital BDC pays an annual dividend of $1.68 per share and has a dividend yield of 10.7%. Stellus Capital Investment pays out 110.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Crescent Capital BDC pays out 140.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Crescent Capital BDC has increased its dividend for 1 consecutive years. Stellus Capital Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Crescent Capital BDC beats Stellus Capital Investment on 10 of the 17 factors compared between the two stocks.
About Stellus Capital Investment
Stellus Capital Investment Corporation is a business development company specializing in investments in private middle-market companies. It invests through first lien, second lien, unitranche, and mezzanine debt financing, often with a corresponding equity investment. The fund prefers to invest in US and Canada. The fund seeks to invest in companies with an EBITDA between $5 million and $50 million.
About Crescent Capital BDC
Crescent Capital BDC, Inc. is as a business development company private equity / buyouts and loan fund. It specializes in directly investing. It specializes in middle market. The fund seeks to invest in United States.
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