Is Stellus Capital Investment Corp. overvalued or undervalued?

As of 6 May 2021, Stellus Capital Investment Corp. has moved from an attractive to a very attractive valuation grade. The company is currently undervalued, as evidenced by its P/E ratio of 10, which is significantly lower than peers like Fidus Investment Corp. at 8.87 and Gladstone Capital Corp. at 6.82. Additionally, Stellus boasts a PEG ratio of 0.34, indicating strong growth potential relative to its price, while its dividend yield stands at an impressive 9.64%.
In comparison to its peers, Stellus Capital's EV to EBITDA ratio of 3.71 is more favorable than Fidus Investment Corp.'s 5.73, suggesting better earnings potential relative to enterprise value. The company's return on capital employed (ROCE) is notably high at 27.79%, further supporting its undervaluation status. Despite recent underperformance against the S&P 500 over one year, the long-term outlook remains positive, with a 5-year return of 77.01%.