Analyzing Oaktree Specialty Lending (NASDAQ:OCSL) & Stifel Financial (NYSE:SF)

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

Institutional and Insider Ownership

36.8% of Oaktree Specialty Lending shares are held by institutional investors. Comparatively, 82.0% of Stifel Financial shares are held by institutional investors. 0.3% of Oaktree Specialty Lending shares are held by company insiders. Comparatively, 3.4% of Stifel Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Oaktree Specialty Lending pays an annual dividend of $1.20 per share and has a dividend yield of 9.6%. Stifel Financial pays an annual dividend of $1.36 per share and has a dividend yield of 1.9%. 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. Stifel Financial pays out 23.6% of its earnings in the form of a dividend. Stifel Financial has increased its dividend for 9 consecutive years.

Earnings and Valuation

This table compares Oaktree Specialty Lending and Stifel Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$316.80 million	3.48	$33.92 million	$0.48	26.04
Stifel Financial	$5.53 billion	2.00	$683.78 million	$5.76	12.72

Stifel Financial has higher revenue and earnings than Oaktree Specialty Lending. Stifel Financial 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 & Volatility

Oaktree Specialty Lending has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Stifel Financial has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Oaktree Specialty Lending and Stifel Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	1	7	0	0	1.88
Stifel Financial	1	3	5	0	2.44

Oaktree Specialty Lending presently has a consensus target price of $11.83, suggesting a potential downside of 5.33%. Stifel Financial has a consensus target price of $85.71, suggesting a potential upside of 16.94%. Given Stifel Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Stifel Financial is more favorable than Oaktree Specialty Lending.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Oaktree Specialty Lending	14.45%	9.70%	4.64%
Stifel Financial	16.50%	19.38%	2.39%

Summary

Stifel Financial beats Oaktree Specialty Lending on 13 of the 17 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 Stifel Financial

Stifel Financial Corp., a financial services and bank holding company, provides retail and institutional wealth management, and investment banking services to individual investors, corporations, municipalities, and institutions in the United States and internationally. It operates in three segments: Global Wealth Management, Institutional Group, and Other. The company provides private client services, including securities transaction and financial planning services; institutional equity and fixed income sales, trading and research, and municipal finance services; investment banking services, such as mergers and acquisitions, public offerings, and private placements; and retail and commercial banking services comprising personal and commercial lending programs, as well as deposit accounts. It participates in and manages underwritings for corporate and public finance; and offers financial advisory and securities brokerage services. The company was founded in 1890 and is headquartered in Saint Louis, Missouri.