Analyzing Stellus Capital Investment (NYSE:SCM) & MDB Capital (NASDAQ:MDBH)

Stellus Capital Investment (NYSE:SCM) and MDB Capital (NASDAQ:MDBH) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, risk, institutional ownership, dividends, profitability and earnings.

Insider & Institutional Ownership

13.2% of Stellus Capital Investment shares are held by institutional investors. Comparatively, 0.3% of MDB Capital shares are held by institutional investors. 4.2% of Stellus Capital Investment shares are held by insiders. Comparatively, 55.8% of MDB Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Stellus Capital Investment and MDB Capital”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	$102.14 million	2.34	$27.05 million	$1.02	8.22
MDB Capital	$4.91 million	5.96	-$21.25 million	($2.18)	-1.30

Stellus Capital Investment has higher revenue and earnings than MDB Capital. MDB Capital is trading at a lower price-to-earnings ratio than Stellus Capital Investment, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Stellus Capital Investment and MDB Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stellus Capital Investment	30.66%	9.09%	3.32%
MDB Capital	N/A	-39.77%	-38.48%

Risk & Volatility

Stellus Capital Investment has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, MDB Capital has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Stellus Capital Investment and MDB Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stellus Capital Investment	0	3	1	0	2.25
MDB Capital	1	0	0	0	1.00

Stellus Capital Investment presently has a consensus target price of $9.25, indicating a potential upside of 10.32%. Given Stellus Capital Investment’s stronger consensus rating and higher probable upside, equities analysts plainly believe Stellus Capital Investment is more favorable than MDB Capital.

Summary

Stellus Capital Investment beats MDB Capital on 11 of the 14 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 MDB Capital

MDB Capital Holdings, LLC, through its subsidiaries, primarily operates as a broker-dealer. The company operates through two segments, Broker Dealer & Intellectual Property Service, and Technology Development. The Broker Dealer & Intellectual Property Service segment operates as a full-service broker dealer that focuses on conducting private and public securities offerings, as well as providing research services for investment banking due diligence. The Technology Development segment engages in the synthetic biology technology development business. The company was founded in 1997 and is based in Addison, Texas.