The Bank of New York Mellon (NYSE:BK) and Stellus Capital Investment (NYSE:SCM) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, valuation, dividends and risk.
Volatility and Risk
The Bank of New York Mellon has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500. Comparatively, Stellus Capital Investment has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.
Profitability
This table compares The Bank of New York Mellon and Stellus Capital Investment's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| The Bank of New York Mellon | 23.09% | 9.89% | 0.89% |
| Stellus Capital Investment | 8.91% | 9.70% | 3.74% |
Insider & Institutional Ownership
82.3% of The Bank of New York Mellon shares are held by institutional investors. Comparatively, 15.6% of Stellus Capital Investment shares are held by institutional investors. 0.1% of The Bank of New York Mellon shares are held by insiders. Comparatively, 5.4% of Stellus Capital Investment shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Dividends
The Bank of New York Mellon pays an annual dividend of $1.24 per share and has a dividend yield of 2.6%. Stellus Capital Investment pays an annual dividend of $1.00 per share and has a dividend yield of 7.4%. The Bank of New York Mellon pays out 30.8% of its earnings in the form of a dividend. Stellus Capital Investment pays out 81.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The Bank of New York Mellon has increased its dividend for 1 consecutive years and Stellus Capital Investment has increased its dividend for 1 consecutive years.
Valuation and Earnings
This table compares The Bank of New York Mellon and Stellus Capital Investment's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| The Bank of New York Mellon | $20.77 billion | 2.05 | $4.44 billion | $4.02 | 12.09 |
| Stellus Capital Investment | $58.91 million | 4.44 | $26.44 million | $1.23 | 10.92 |
The Bank of New York Mellon has higher revenue and earnings than Stellus Capital Investment. Stellus Capital Investment is trading at a lower price-to-earnings ratio than The Bank of New York Mellon, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current ratings and target prices for The Bank of New York Mellon and Stellus Capital Investment, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| The Bank of New York Mellon | 0 | 7 | 10 | 0 | 2.59 |
| Stellus Capital Investment | 0 | 1 | 2 | 0 | 2.67 |
The Bank of New York Mellon presently has a consensus price target of $49.40, suggesting a potential upside of 1.60%. Stellus Capital Investment has a consensus price target of $11.00, suggesting a potential downside of 18.09%. Given The Bank of New York Mellon's higher possible upside, analysts plainly believe The Bank of New York Mellon is more favorable than Stellus Capital Investment.
Summary
The Bank of New York Mellon beats Stellus Capital Investment on 9 of the 16 factors compared between the two stocks.
