Financial Contrast: Metalpha Technology (NASDAQ:MATH) and Stellus Capital Investment (NYSE:SCM)

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

Institutional & Insider Ownership

13.2% of Stellus Capital Investment shares are owned by institutional investors. Comparatively, 30.5% of Metalpha Technology shares are owned by institutional investors. 4.7% of Stellus Capital Investment shares are owned by company insiders. Comparatively, 5.9% of Metalpha Technology shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Stellus Capital Investment	45.39%	13.49%	4.88%
Metalpha Technology	N/A	N/A	N/A

Risk & Volatility

Stellus Capital Investment has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Metalpha Technology has a beta of -1.24, meaning that its stock price is 224% less volatile than the S&P 500.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stellus Capital Investment	$51.21 million	7.20	$17.53 million	$1.80	7.21
Metalpha Technology	$30.86 million	2.32	-$3.68 million	N/A	N/A

Stellus Capital Investment has higher revenue and earnings than Metalpha Technology.

Analyst Recommendations

This is a breakdown of recent ratings for Stellus Capital Investment and Metalpha Technology, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stellus Capital Investment	0	2	0	0	2.00
Metalpha Technology	0	0	0	0	0.00

Stellus Capital Investment currently has a consensus price target of $13.13, suggesting a potential upside of 1.12%. Given Stellus Capital Investment’s stronger consensus rating and higher probable upside, analysts clearly believe Stellus Capital Investment is more favorable than Metalpha Technology.

Dividends

Stellus Capital Investment pays an annual dividend of $1.60 per share and has a dividend yield of 12.3%. Metalpha Technology pays an annual dividend of $0.10 per share and has a dividend yield of 5.4%. Stellus Capital Investment pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Stellus Capital Investment beats Metalpha Technology on 10 of the 13 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 Metalpha Technology

Metalpha Technology Holding Limited, together with its subsidiaries, provides wealth management services in Hong Kong. The company offers digital asset-based wealth management services, which include issuing traditional financial and cryptocurrency derivative products to over-the-counter clients, providing crypto derivative market making services, and proprietary trading of digital assets and crypto derivative products; and securities advising and asset management services. It serves institutional investors and high-net-worth individuals. The company was formerly known as Dragon Victory International Limited and changed its name to Metalpha Technology Holding Limited in November 2022. The company was incorporated in 2015 and is headquartered in Wan Chai, Hong Kong.