Contrasting Amalgamated Financial (NASDAQ:AMAL) & Stellus Capital Investment (NYSE:SCM)

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

Dividends

Stellus Capital Investment pays an annual dividend of $1.60 per share and has a dividend yield of 12.8%. Amalgamated Financial pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. Stellus Capital Investment pays out 146.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Amalgamated Financial pays out 16.9% of its earnings in the form of a dividend. Amalgamated Financial has raised its dividend for 4 consecutive years.

Earnings and Valuation

This table compares Stellus Capital Investment and Amalgamated Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stellus Capital Investment	$104.74 million	3.45	$45.85 million	$1.09	11.47
Amalgamated Financial	$323.80 million	3.03	$106.43 million	$3.32	9.89

Amalgamated Financial has higher revenue and earnings than Stellus Capital Investment. Amalgamated Financial 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.

Insider and Institutional Ownership

13.2% of Stellus Capital Investment shares are owned by institutional investors. Comparatively, 75.9% of Amalgamated Financial shares are owned by institutional investors. 4.0% of Stellus Capital Investment shares are owned by company insiders. Comparatively, 1.3% of Amalgamated Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Stellus Capital Investment	29.77%	10.72%	3.95%
Amalgamated Financial	22.97%	14.75%	1.30%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Stellus Capital Investment and Amalgamated Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stellus Capital Investment	0	3	0	0	2.00
Amalgamated Financial	0	2	1	0	2.33

Stellus Capital Investment presently has a consensus target price of $13.00, suggesting a potential upside of 4.00%. Amalgamated Financial has a consensus target price of $33.50, suggesting a potential upside of 2.06%. Given Stellus Capital Investment’s higher probable upside, equities analysts clearly believe Stellus Capital Investment is more favorable than Amalgamated Financial.

Risk and Volatility

Stellus Capital Investment has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, Amalgamated Financial has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500.

Summary

Amalgamated Financial beats Stellus Capital Investment on 10 of the 17 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 Amalgamated Financial

Amalgamated Financial Corp. operates as the bank holding company for Amalgamated Bank that provides commercial and retail banking, investment management, and trust and custody services for commercial and retail customers in the United States. The company accepts various deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts, NOW accounts, and certificates of deposit. It also provides various commercial loans comprising commercial and industrial, multifamily mortgage, and commercial real estate loans; residential mortgage loans; and retail loans, such as residential real estate, consumer solar, and consumer and other loans. In addition, the company offers online banking, bill payment, online cash management, and safe deposit box rental services; debit and ATM cards; and trust, custody, and investment management services comprising asset safekeeping, corporate actions, income collections, proxy, account transition, asset transfers, and conversion management services. Further, it provides investment products, such as funds spanning equity, fixed-income, real estate, and alternative investment products; and brokerage, asset management, and insurance products. Amalgamated Financial Corp. was founded in 1923 and is headquartered in New York, New York.