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

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

Insider and Institutional Ownership

0.3% of MDB Capital shares are held by institutional investors. Comparatively, 13.2% of Stellus Capital Investment shares are held by institutional investors. 55.8% of MDB Capital shares are held by company insiders. Comparatively, 4.2% of Stellus Capital Investment shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

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

Risk & Volatility

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

Earnings & Valuation

This table compares MDB Capital and Stellus Capital Investment”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MDB Capital	$4.91 million	6.19	-$21.25 million	($2.18)	-1.35
Stellus Capital Investment	$102.14 million	2.44	$27.05 million	$1.02	8.58

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.

Analyst Ratings

This is a breakdown of recent recommendations for MDB Capital and Stellus Capital Investment, as provided by MarketBeat.com.

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

Stellus Capital Investment has a consensus target price of $9.25, suggesting a potential upside of 5.71%. Given Stellus Capital Investment’s stronger consensus rating and higher possible upside, 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 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.

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.