XP (NASDAQ:XP) and Oaktree Specialty Lending (NASDAQ:OCSL) Head-To-Head Analysis

Oaktree Specialty Lending (NASDAQ:OCSL) and XP (NASDAQ:XP) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, valuation, risk, institutional ownership, analyst recommendations, earnings and profitability.

Dividends

Oaktree Specialty Lending pays an annual dividend of $1.20 per share and has a dividend yield of 10.3%. XP pays an annual dividend of $0.40 per share and has a dividend yield of 2.4%. Oaktree Specialty Lending pays out 210.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. XP pays out 22.1% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Oaktree Specialty Lending and XP”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$55.37 million	18.58	$33.92 million	$0.57	20.49
XP	$8.25 billion	1.09	$925.91 million	$1.81	9.22

XP has higher revenue and earnings than Oaktree Specialty Lending. XP 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Oaktree Specialty Lending	16.66%	9.56%	4.60%
XP	27.40%	22.51%	1.34%

Analyst Ratings

This is a breakdown of recent ratings for Oaktree Specialty Lending and XP, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	0	5	0	0	2.00
XP	0	2	3	0	2.60

Oaktree Specialty Lending currently has a consensus price target of $11.83, suggesting a potential upside of 1.31%. XP has a consensus price target of $23.33, suggesting a potential upside of 39.80%. Given XP’s stronger consensus rating and higher possible upside, analysts clearly believe XP is more favorable than Oaktree Specialty Lending.

Volatility and Risk

Oaktree Specialty Lending has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500. Comparatively, XP has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500.

Institutional & Insider Ownership

36.8% of Oaktree Specialty Lending shares are owned by institutional investors. Comparatively, 59.2% of XP shares are owned by institutional investors. 0.3% of Oaktree Specialty Lending shares are owned 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.

Summary

XP beats Oaktree Specialty Lending on 11 of the 16 factors compared between the two stocks.

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.

About XP

XP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers XP Educação, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.