Is Stellus Capital Investment Corp. overvalued or undervalued?

As of 6 May 2021, the valuation grade for Stellus Capital Investment Corp. moved from expensive to very attractive, indicating a significant improvement in its valuation outlook. The company appears undervalued based on its key ratios, including a P/E ratio of 10, a Price to Book Value of 1.02, and a PEG ratio of 0.34, all of which suggest that the stock is trading at a discount relative to its earnings growth potential.
In comparison to its peers, Stellus Capital's P/E ratio of 10.86 is lower than that of Fidus Investment Corp. at 9.59, but higher than Gladstone Investment Corp. at 6.80, indicating a competitive position within the industry. Additionally, the company's dividend yield of 9.64% is notably attractive, further supporting its undervalued status. While Stellus has shown a positive year-to-date return of 2.47%, it lags behind the S&P 500's return of 12.22%, and over the longer term, its 5-year return of 62.63% is significantly lower than the S&P 500's 96.61%, reinforcing the notion that there may be room for growth in its valuation.