Head to Head Review: Stellus Capital Investment (SCM) vs. Eaton Vance Floating-Rate Income Trust (EFT)

Stellus Capital Investment (NYSE: SCM) and Eaton Vance Floating-Rate Income Trust (NYSE:EFT) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.

Institutional & Insider Ownership

27.7% of Stellus Capital Investment shares are owned by institutional investors. 4.2% of Stellus Capital Investment shares are owned 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.

Profitability

This table compares Stellus Capital Investment and Eaton Vance Floating-Rate Income Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stellus Capital Investment 57.94% 9.35% 4.96%
Eaton Vance Floating-Rate Income Trust N/A N/A N/A

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Stellus Capital Investment and Eaton Vance Floating-Rate Income Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stellus Capital Investment 0 1 3 0 2.75
Eaton Vance Floating-Rate Income Trust 0 0 0 0 N/A

Stellus Capital Investment currently has a consensus price target of $14.50, suggesting a potential upside of 15.63%. Given Stellus Capital Investment’s higher possible upside, equities research analysts plainly believe Stellus Capital Investment is more favorable than Eaton Vance Floating-Rate Income Trust.

Risk and Volatility

Stellus Capital Investment has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500. Comparatively, Eaton Vance Floating-Rate Income Trust has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500.

Dividends

Stellus Capital Investment pays an annual dividend of $1.36 per share and has a dividend yield of 10.8%. Eaton Vance Floating-Rate Income Trust does not pay a dividend. Stellus Capital Investment pays out 81.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Stellus Capital Investment and Eaton Vance Floating-Rate Income Trust’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stellus Capital Investment $39.49 million 5.06 $23.19 million $1.68 7.46
Eaton Vance Floating-Rate Income Trust N/A N/A N/A N/A N/A

Stellus Capital Investment has higher revenue and earnings than Eaton Vance Floating-Rate Income Trust.

Summary

Stellus Capital Investment beats Eaton Vance Floating-Rate Income Trust on 10 of the 11 factors compared between the two stocks.

About Stellus Capital Investment

Stellus Capital Investment Corporation is a closed-end, non-diversified management investment company. The Company originates and invests primarily in private middle-market companies through first lien, second lien, unitranche and mezzanine debt financing, with corresponding equity co-investments. The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation. It invests in various sectors, such as business services, energy, general industrial, government services, healthcare, software and specialty finance. Its investment advisor is Stellus Capital Management, LLC (Stellus Capital Management). Stellus Capital Management is responsible for analyzing investment opportunities, conducting research and performing due diligence on investments, negotiating and structuring the Company’s investments, originating prospective investments, and monitoring its investments and portfolio companies on an ongoing basis.

About Eaton Vance Floating-Rate Income Trust

Eaton Vance Floating-Rate Income Trust (the Trust) is a diversified, closed-end management investment company. The Trust’s investment objective is to provide a high level of current income. The Trust will, as a secondary objective, also seek preservation of capital to the extent consistent with its primary goal of high current income. Normally, the Trust invests approximately 80% of its total assets in senior loans of domestic and foreign borrowers that are denominated in the United States dollars, euros, British pounds, Swiss francs, Canadian dollars and Australian dollars. The Trust invests in a range of sectors, including healthcare, electronics/electrical, business equipment and services, retailers (except food and drug), chemicals and plastics, food products, oil and gas, lodging and casinos, insurance, and leisure goods/activities/movies. Eaton Vance Management is the investment advisor of the Trust.

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