PJT Partners (NYSE:PJT) and Stellus Capital Investment (NYSE:SCM) Critical Contrast

Stellus Capital Investment (NYSE:SCM) and PJT Partners (NYSE:PJT) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Stellus Capital Investment and PJT Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stellus Capital Investment	1	2	1	0	2.00
PJT Partners	1	4	2	0	2.14

Stellus Capital Investment presently has a consensus price target of $9.25, indicating a potential upside of 39.01%. PJT Partners has a consensus price target of $168.33, indicating a potential upside of 19.34%. Given Stellus Capital Investment’s higher probable upside, analysts plainly believe Stellus Capital Investment is more favorable than PJT Partners.

Profitability

This table compares Stellus Capital Investment and PJT Partners’ 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%
PJT Partners	10.57%	32.66%	18.28%

Earnings and Valuation

This table compares Stellus Capital Investment and PJT Partners”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stellus Capital Investment	$102.14 million	1.86	$27.05 million	$1.02	6.52
PJT Partners	$1.71 billion	2.10	$180.12 million	$7.31	19.30

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

Dividends

Stellus Capital Investment pays an annual dividend of $1.00 per share and has a dividend yield of 15.0%. PJT Partners pays an annual dividend of $1.00 per share and has a dividend yield of 0.7%. Stellus Capital Investment pays out 98.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PJT Partners pays out 13.7% of its earnings in the form of a dividend.

Volatility & Risk

Stellus Capital Investment has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, PJT Partners has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Institutional & Insider Ownership

13.2% of Stellus Capital Investment shares are owned by institutional investors. Comparatively, 89.2% of PJT Partners shares are owned by institutional investors. 4.2% of Stellus Capital Investment shares are owned by insiders. Comparatively, 11.0% of PJT Partners shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

PJT Partners beats Stellus Capital Investment on 13 of the 16 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 PJT Partners

PJT Partners Inc., an investment bank, provides various strategic and capital markets advisory, restructuring and special situations, and shareholder advisory services to corporations, financial sponsors, institutional investors, and governments worldwide. It offers advisory services to clients on various transactions, including mergers and acquisitions (M&A), spin-offs, activism defense, contested M&A, joint ventures, minority investments, and divestitures. The company also advises private and public company boards and management teams on strategies for building productive investor relationships with a focus on shareholder engagement; and strategic investor relations; environmental, social, and governance matters; and other investor-related matters. In addition, it provides advisory services related to debt and acquisition financings; structured product offerings; public equity raises, including initial public offering and SPAC offerings; and private capital raises for early and later stage companies, as well as other capital structure related matters. Further, the company offers advisory services in financial restructurings and reorganizations; liability management; distressed mergers and acquisitions; and to management teams, corporate boards, sponsors and creditors. Additionally, it provides private fund advisory and fundraising services for a range of investment strategies; and advisory services to general and partners on liquidity and other structured solutions. The company was formerly known as Blackstone Advisory Inc. and changed its name to PJT Partners Inc. in March 2015. PJT Partners Inc. was incorporated in 2014 and is headquartered in New York, New York.