Financial Comparison: Gladstone Capital (NASDAQ:GLAD) versus Blackstone Secured Lending Fund (NYSE:BXSL)

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

Dividends

Gladstone Capital pays an annual dividend of $1.80 per share and has a dividend yield of 9.3%. Blackstone Secured Lending Fund pays an annual dividend of $3.08 per share and has a dividend yield of 12.3%. Gladstone Capital pays out 113.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blackstone Secured Lending Fund pays out 125.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gladstone Capital has raised its dividend for 4 consecutive years.

Earnings and Valuation

This table compares Gladstone Capital and Blackstone Secured Lending Fund”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Capital	$37.39 million	11.64	$58.11 million	$1.59	12.11
Blackstone Secured Lending Fund	$1.42 billion	4.09	$563.46 million	$2.46	10.15

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

Volatility & Risk

Gladstone Capital has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Blackstone Secured Lending Fund has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gladstone Capital	39.42%	9.56%	5.40%
Blackstone Secured Lending Fund	39.69%	11.82%	5.23%

Analyst Recommendations

This is a summary of recent ratings for Gladstone Capital and Blackstone Secured Lending Fund, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Capital	0	4	2	0	2.33
Blackstone Secured Lending Fund	1	3	5	0	2.44

Gladstone Capital presently has a consensus target price of $21.67, suggesting a potential upside of 12.50%. Blackstone Secured Lending Fund has a consensus target price of $26.28, suggesting a potential upside of 5.26%. Given Gladstone Capital’s higher possible upside, analysts clearly believe Gladstone Capital is more favorable than Blackstone Secured Lending Fund.

Institutional & Insider Ownership

10.7% of Gladstone Capital shares are held by institutional investors. Comparatively, 36.5% of Blackstone Secured Lending Fund shares are held by institutional investors. 3.8% of Gladstone Capital shares are held by insiders. Comparatively, 0.1% of Blackstone Secured Lending Fund shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Blackstone Secured Lending Fund beats Gladstone Capital on 9 of the 17 factors compared between the two stocks.

About Gladstone Capital

Gladstone Capital Corporation is a business development company specializing in lower middle market, growth capital, add on acquisitions, change of control, buy & build strategies, debt refinancing, debt investments in senior term loans, revolving loans, secured first and second lien term loans, senior subordinated loans, unitranche loans, junior subordinated loans, and mezzanine loans and equity investments in the form of common stock, preferred stock, limited liability company interests, or warrants. It operates as a business development company. The fund also makes private equity investments in acquisitions, buyouts and recapitalizations, and refinancing existing debts. It targets small and medium-sized companies in United States. It is industry agnostic and seeks to invest in companies engaged in the business services, light and specialty manufacturing, niche industrial products and services, specialty consumer products and services, energy services, transportation and logistics, healthcare and education services, specialty chemicals, media and communications and aerospace and defense. The fund seeks to invest between $7 million and $30 million in companies that have between $20 million and $150 million in sales and EBITDA between $3 million and $25 million. It prefers to acquire minority stakes. It seeks to exit its investments through strategic acquisitions by other industry participants or financial buyers, initial public offerings of common stock, or other capital market transactions.

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.