Stellus Capital Investment Corporation Q1 2026 Earnings Recap

Stellus Capital’s shares declined modestly by 0.8% following a quarter marked by a decline in net asset value driven by realized and unrealized losses on debt investments and elevated nonaccrual loan levels, tempering investor confidence despite stable core income and maintaining dividends.

Key Takeaways

• Core net investment income was $0.27 per share, with total realized income of $0.29 per share, including $0.75 million in realized gains.
• Net asset value decreased by $0.28 per share, primarily due to $0.08 per share of dividends paid in excess of earnings and $0.20 per share of net realized and unrealized losses related mainly to debt investments.
• The investment portfolio at fair value declined to $990 million from $1.01 billion, with 117 portfolio companies at quarter-end.
• Nonaccrual loans increased to six companies, representing 9.2% of total cost and 5.2% of fair value of the portfolio, higher than desired and a clear risk factor.
• Management announced a $20 million share repurchase program at a roughly 25% discount to net asset value, reflecting undervaluation concerns but also uncertain outlook on dividends, which may normalize lower over time.