Stellus Capital Investment (NYSE:SCM – Get Free Report) and MDB Capital (NASDAQ:MDBH – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.
Analyst Ratings
This is a breakdown of recent 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 currently has a consensus price target of $9.25, indicating a potential upside of 5.71%. Given Stellus Capital Investment’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Stellus Capital Investment is more favorable than MDB Capital.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Stellus Capital Investment | $102.14 million | 2.44 | $27.05 million | $1.02 | 8.58 |
| MDB Capital | $4.91 million | 6.19 | -$21.25 million | ($2.18) | -1.35 |
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.
Risk and Volatility
Stellus Capital Investment has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500. Comparatively, MDB Capital has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.
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% |
Institutional and Insider Ownership
13.2% of Stellus Capital Investment shares are owned by institutional investors. Comparatively, 0.3% of MDB Capital shares are owned by institutional investors. 4.2% of Stellus Capital Investment shares are owned by company insiders. Comparatively, 55.8% of MDB Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
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.
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