Stellus Capital Investment (NYSE:SCM) Shares Cross Below 200 Day Moving Average - Should You Sell?

Key Points

• Stellus Capital Investment (SCM) has crossed below its 200‑day moving average
• The firm pays a monthly dividend of $0.1133, implying a 13.8% yield, but the dividend payout ratio is very high at 144.68%, raising questions about sustainability.
• Insiders have been buying: the CEO bought 35,000 shares at roughly $8.70 and the CFO bought 5,700 shares, suggesting insider confidence despite downgrades and price weakness.

Stellus Capital Investment Corporation (NYSE:SCM - Get Free Report) passed below its two hundred day moving average during trading on Friday . The stock has a two hundred day moving average of $11.38 and traded as low as $9.65. Stellus Capital Investment shares last traded at $9.8440, with a volume of 87,446 shares trading hands.

Analysts Set New Price Targets

SCM has been the topic of a number of recent research reports. Keefe, Bruyette & Woods reduced their price objective on Stellus Capital Investment from $13.00 to $9.00 and set a "market perform" rating on the stock in a research note on Monday, March 16th. Zacks Research cut Stellus Capital Investment from a "hold" rating to a "strong sell" rating in a research note on Thursday, April 16th. Two equities research analysts have rated the stock with a Hold rating and one has assigned a Sell rating to the company. According to MarketBeat.com, the stock presently has a consensus rating of "Reduce" and a consensus price target of $9.00.

Stellus Capital Investment Stock Up 1.8%

The stock has a 50 day moving average price of $9.58 and a 200-day moving average price of $11.38. The stock has a market capitalization of $284.98 million, a P/E ratio of 10.47 and a beta of 0.66. The company has a debt-to-equity ratio of 1.13, a current ratio of 0.14 and a quick ratio of 0.14.

Stellus Capital Investment (NYSE:SCM - Get Free Report) last announced its quarterly earnings data on Wednesday, March 11th. The investment management company reported $0.29 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $0.31 by ($0.02). Stellus Capital Investment had a net margin of 26.48% and a return on equity of 10.28%. The company had revenue of $23.98 million for the quarter, compared to the consensus estimate of $26.33 million. As a group, research analysts expect that Stellus Capital Investment Corporation will post 1.09 EPS for the current fiscal year.

Stellus Capital Investment Dividend Announcement

The firm also recently announced a monthly dividend, which will be paid on Wednesday, July 15th. Investors of record on Tuesday, June 30th will be paid a $0.1133 dividend. The ex-dividend date of this dividend is Tuesday, June 30th. This represents a c) annualized dividend and a dividend yield of 13.8%. Stellus Capital Investment's dividend payout ratio (DPR) is presently 144.68%.

Insider Buying and Selling

In other Stellus Capital Investment news, CEO Robert T. Ladd bought 35,000 shares of the business's stock in a transaction that occurred on Friday, March 13th. The shares were bought at an average cost of $8.70 per share, with a total value of $304,500.00. Following the completion of the purchase, the chief executive officer directly owned 667,935 shares of the company's stock, valued at $5,811,034.50. This trade represents a 5.53% increase in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available at this link. Also, CFO W. Todd Huskinson bought 5,700 shares of the business's stock in a transaction that occurred on Friday, March 13th. The stock was acquired at an average cost of $8.79 per share, for a total transaction of $50,103.00. Following the completion of the purchase, the chief financial officer directly owned 54,297 shares of the company's stock, valued at $477,270.63. The trade was a 11.73% increase in their ownership of the stock. Additional details regarding this purchase are available in the official SEC disclosure. Insiders have acquired 87,890 shares of company stock valued at $766,551 over the last ninety days. 3.99% of the stock is owned by insiders.

Institutional Trading of Stellus Capital Investment

Several large investors have recently modified their holdings of SCM. Geneos Wealth Management Inc. bought a new stake in shares of Stellus Capital Investment in the second quarter worth about $25,000. Laurel Wealth Advisors LLC bought a new stake in shares of Stellus Capital Investment in the fourth quarter worth about $26,000. JPMorgan Chase & Co. bought a new stake in shares of Stellus Capital Investment in the third quarter worth about $28,000. BNP Paribas Financial Markets bought a new stake in shares of Stellus Capital Investment in the second quarter worth about $60,000. Finally, Kestra Advisory Services LLC bought a new stake in shares of Stellus Capital Investment in the fourth quarter worth about $62,000. 13.22% of the stock is owned by institutional investors.

Stellus Capital Investment Company Profile

Stellus Capital Investment Corporation NYSE: SCM is a closed-end, externally managed business development company that provides debt and equity financing to middle market companies in the United States. As an investment vehicle specializing in private credit, Stellus focuses on originating and structuring senior secured loans, unitranche facilities, mezzanine debt, and equity co-investments tailored to the unique needs of growing businesses. Its flexible capital solutions are designed to support acquisitions, recapitalizations, growth initiatives, and balance sheet refinancings.

Operating under an evergreen structure, Stellus Capital Investment partners with a diverse group of portfolio companies across industries such as manufacturing, healthcare, business services, and specialty finance.

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