Critical Analysis: Blackstone Secured Lending Fund (NYSE:BXSL) versus Saratoga Investment (NYSE:SAR)

Blackstone Secured Lending Fund (NYSE:BXSL) and Saratoga Investment (NYSE:SAR) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, profitability, risk and dividends.

Valuation & Earnings

This table compares Blackstone Secured Lending Fund and Saratoga Investment”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blackstone Secured Lending Fund	$1.33 billion	4.54	$694.10 million	$2.66	9.79
Saratoga Investment	$148.85 million	2.53	$28.09 million	$2.44	9.53

Blackstone Secured Lending Fund has higher revenue and earnings than Saratoga Investment. Saratoga Investment is trading at a lower price-to-earnings ratio than Blackstone Secured Lending Fund, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Blackstone Secured Lending Fund and Saratoga Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackstone Secured Lending Fund	42.38%	11.85%	5.32%
Saratoga Investment	30.61%	9.19%	3.09%

Dividends

Blackstone Secured Lending Fund pays an annual dividend of $3.08 per share and has a dividend yield of 11.8%. Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 12.9%. Blackstone Secured Lending Fund pays out 115.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Saratoga Investment pays out 123.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

36.5% of Blackstone Secured Lending Fund shares are held by institutional investors. Comparatively, 19.1% of Saratoga Investment shares are held by institutional investors. 0.1% of Blackstone Secured Lending Fund shares are held by company insiders. Comparatively, 10.0% of Saratoga Investment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Blackstone Secured Lending Fund has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Blackstone Secured Lending Fund and Saratoga Investment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackstone Secured Lending Fund	1	2	6	0	2.56
Saratoga Investment	0	6	0	0	2.00

Blackstone Secured Lending Fund currently has a consensus price target of $29.13, suggesting a potential upside of 11.83%. Saratoga Investment has a consensus price target of $23.63, suggesting a potential upside of 1.55%. Given Blackstone Secured Lending Fund’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Blackstone Secured Lending Fund is more favorable than Saratoga Investment.

Summary

Blackstone Secured Lending Fund beats Saratoga Investment on 13 of the 16 factors compared between the two stocks.

About Blackstone Secured Lending Fund

Blackstone Secured Lending Fund is business development company and a Delaware statutory trust formed on March 26, 2018, and structured as an externally managed, non-diversified closed-end investment Fund. On October 26, 2018, the fund elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). In addition, the Fund elected to be treated for U.S. federal income tax purposes, as a regulated investment company (RIC), as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). The fund also intends to continue to comply with the requirements prescribed by the Code in order to maintain tax treatment as a RIC. The fund's investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. The Fund seeks to achieve its investment objective primarily through originated loans, equity and other securities, including syndicated loans, of private U.S. companies, specifically small and middle market companies, typically in the form of first lien senior secured and unitranche loans (including first out/last out loans), and to a lesser extent, second lien, third lien, unsecured and subordinated loans and other debt and equity securities.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.