Oaktree Specialty Lending (NASDAQ:OCSL) Announces Quarterly Earnings Results

Oaktree Specialty Lending (NASDAQ:OCSL) announced its quarterly earnings results on Tuesday. The credit services provider reported $0.38 EPS for the quarter, beating the consensus estimate of $0.36 by $0.02, FiscalAI reports. The firm had revenue of $69.74 million during the quarter, compared to the consensus estimate of $74.35 million. Oaktree Specialty Lending had a net margin of 16.66% and a return on equity of 9.43%. During the same period last year, the firm earned $0.45 EPS.

Here are the key takeaways from Oaktree Specialty Lending’s conference call:

• Non-accruals declined to 2.6% of the debt portfolio (from 3.1% last quarter and 4.6% a year ago); post-quarter sales of legacy non-accruals (Dominion Diagnostics, All Web Leads) generated cash and the firm expects further reductions and redeployments into performing assets.
• Net asset value fell to $15.69 per share (from $16.30) driven mainly by ~310 bps markdowns in software loans and spread widening, which management attributes to market repricing rather than fundamental deterioration.
• liquidity was increased to $671 million (including a $620 million undrawn facility) and net leverage was reduced to 1.04x after selling some liquid positions at cost, positioning OCSL to deploy into new loans that are pricing wider (roughly SOFR+500–550) with a weighted average new-deal yield of ~9.2%.
• The board adjusted the dividend policy by setting a new conservative base dividend of $0.30 per share (supplemental dividend remains 50% of excess ANII), although the quarter’s total cash dividend declared was $0.34.

Oaktree Specialty Lending Price Performance

Shares of Oaktree Specialty Lending stock traded down $0.30 during trading on Thursday, hitting $12.21. 675,743 shares of the stock traded hands, compared to its average volume of 921,521. The stock has a market cap of $1.08 billion, a price-to-earnings ratio of 21.42 and a beta of 0.52. The company has a quick ratio of 0.16, a current ratio of 0.16 and a debt-to-equity ratio of 0.66. Oaktree Specialty Lending has a 52 week low of $10.63 and a 52 week high of $14.77. The firm’s fifty day moving average is $11.77 and its 200-day moving average is $12.60.

Oaktree Specialty Lending Cuts Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Tuesday, June 30th. Stockholders of record on Monday, June 15th will be issued a $0.30 dividend. This represents a $1.20 dividend on an annualized basis and a dividend yield of 9.8%. The ex-dividend date is Monday, June 15th. Oaktree Specialty Lending’s dividend payout ratio is presently 444.44%.

Insiders Place Their Bets

In other news, Director Phyllis R. Caldwell bought 2,500 shares of the business’s stock in a transaction on Monday, March 16th. The stock was acquired at an average price of $10.77 per share, with a total value of $26,925.00. Following the completion of the purchase, the director directly owned 23,500 shares in the company, valued at $253,095. This represents a 11.90% increase in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available through this hyperlink. 0.29% of the stock is owned by insiders.

Institutional Investors Weigh In On Oaktree Specialty Lending

A number of hedge funds have recently made changes to their positions in the business. UBS Group AG boosted its stake in shares of Oaktree Specialty Lending by 7.4% in the 3rd quarter. UBS Group AG now owns 904,340 shares of the credit services provider’s stock valued at $11,802,000 after purchasing an additional 62,158 shares in the last quarter. Invesco Ltd. raised its position in Oaktree Specialty Lending by 25.6% in the 3rd quarter. Invesco Ltd. now owns 886,847 shares of the credit services provider’s stock worth $11,573,000 after purchasing an additional 181,023 shares during the period. Balyasny Asset Management L.P. lifted its stake in Oaktree Specialty Lending by 298.9% in the second quarter. Balyasny Asset Management L.P. now owns 626,324 shares of the credit services provider’s stock worth $8,556,000 after purchasing an additional 469,328 shares during the last quarter. Royal Bank of Canada boosted its position in Oaktree Specialty Lending by 34.3% during the first quarter. Royal Bank of Canada now owns 468,879 shares of the credit services provider’s stock valued at $7,201,000 after buying an additional 119,775 shares during the period. Finally, Two Sigma Investments LP boosted its position in Oaktree Specialty Lending by 221.2% during the third quarter. Two Sigma Investments LP now owns 388,157 shares of the credit services provider’s stock valued at $5,065,000 after buying an additional 267,318 shares during the period. 36.79% of the stock is currently owned by institutional investors.

Analysts Set New Price Targets

A number of equities analysts have weighed in on OCSL shares. Weiss Ratings upgraded Oaktree Specialty Lending from a “sell (d+)” rating to a “hold (c-)” rating in a research note on Wednesday, April 15th. Wall Street Zen raised Oaktree Specialty Lending from a “sell” rating to a “hold” rating in a report on Saturday, April 11th. JPMorgan Chase & Co. decreased their price objective on shares of Oaktree Specialty Lending from $13.50 to $10.50 and set a “neutral” rating on the stock in a research report on Friday, March 13th. Wells Fargo & Company lowered their target price on shares of Oaktree Specialty Lending from $13.00 to $12.00 and set an “equal weight” rating on the stock in a research note on Thursday, February 5th. Finally, Zacks Research upgraded shares of Oaktree Specialty Lending from a “strong sell” rating to a “hold” rating in a research report on Monday, April 6th. Six research analysts have rated the stock with a Hold rating, According to MarketBeat, Oaktree Specialty Lending presently has an average rating of “Hold” and a consensus target price of $12.38.

About Oaktree Specialty Lending

Oaktree Specialty Lending Corporation (NASDAQ: OCSL) is a closed-end, externally managed specialty finance company structured as a business development company (BDC). Launched in 2014, Oaktree Specialty Lending provides customized debt solutions to U.S. middle-market companies, with a focus on senior secured loans, second-lien financings, mezzanine debt and select equity co-investments. The company’s investment strategy centers on floating-rate instruments designed to offer downside protection and income potential in varying interest rate environments.

The firm’s portfolio spans a diverse array of industries, including healthcare, technology, energy, business services and consumer products.