Head-To-Head Analysis: Oaktree Specialty Lending (NASDAQ:OCSL) vs. Barings Bdc (NYSE:BBDC)

Barings Bdc (NYSE:BBDC) and Oaktree Specialty Lending (NASDAQ:OCSL) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, institutional ownership and earnings.

Valuation and Earnings

This table compares Barings Bdc and Oaktree Specialty Lending”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Barings Bdc	$279.21 million	3.32	$101.92 million	$0.83	10.68
Oaktree Specialty Lending	$53.53 million	21.01	$33.92 million	$0.48	26.60

Barings Bdc has higher revenue and earnings than Oaktree Specialty Lending. Barings Bdc is trading at a lower price-to-earnings ratio than Oaktree Specialty Lending, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Barings Bdc has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, Oaktree Specialty Lending has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.

Dividends

Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 11.7%. Oaktree Specialty Lending pays an annual dividend of $1.20 per share and has a dividend yield of 9.4%. Barings Bdc pays out 125.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Oaktree Specialty Lending pays out 250.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has raised its dividend for 3 consecutive years. Barings Bdc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

44.1% of Barings Bdc shares are owned by institutional investors. Comparatively, 36.8% of Oaktree Specialty Lending shares are owned by institutional investors. 0.6% of Barings Bdc shares are owned by insiders. Comparatively, 0.3% of Oaktree Specialty Lending shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Barings Bdc and Oaktree Specialty Lending, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Barings Bdc	0	4	1	0	2.20
Oaktree Specialty Lending	0	6	0	0	2.00

Barings Bdc presently has a consensus target price of $9.75, indicating a potential upside of 9.98%. Oaktree Specialty Lending has a consensus target price of $11.83, indicating a potential downside of 7.33%. Given Barings Bdc’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Barings Bdc is more favorable than Oaktree Specialty Lending.

Profitability

This table compares Barings Bdc and Oaktree Specialty Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Barings Bdc	32.73%	10.07%	4.38%
Oaktree Specialty Lending	14.45%	9.70%	4.64%

Summary

Barings Bdc beats Oaktree Specialty Lending on 14 of the 17 factors compared between the two stocks.

About Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.

About Oaktree Specialty Lending

Oaktree Specialty Lending Corporation is a business development company. The fund specializing in investments in middle market, bridge financing, first and second lien debt financing, unsecured and mezzanine loan, mezzanine debt, senior and junior secured debt, expansions, sponsor-led acquisitions, preferred equity, and management buyouts in small and mid-sized companies. It seeks to invest in education services, business services, retail and consumer, healthcare, manufacturing, food and restaurants, construction and engineering. The firm also seeks investment in media, advertising sectors, software, IT services, pharmaceuticals, biotechnology, real estate management and development, chemicals, machinery, and internet and direct marketing retail sectors. It invests between $5 million to $75 million principally in the form of one-stop, first lien, and second lien debt investments, which may include an equity co-investment component in companies. The firm invest in companies having enterprise value between $20 million and $150 million and EBITDA between $3 million and $50 million. The fund has a hold size of up to $75 million and may underwrite transactions up to $100 million. It primarily invests in North America. The fund seeks to be a lead investor in its portfolio companies.