Contrasting Oaktree Specialty Lending (NASDAQ:OCSL) and Piper Sandler Companies (NYSE:PIPR)

Oaktree Specialty Lending (NASDAQ:OCSL) and Piper Sandler Companies (NYSE:PIPR) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Risk & Volatility

Oaktree Specialty Lending has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, Piper Sandler Companies has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500.

Valuation and Earnings

This table compares Oaktree Specialty Lending and Piper Sandler Companies”s 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	3.38	$33.92 million	$0.48	25.29
Piper Sandler Companies	$2.05 billion	2.19	$281.33 million	$4.32	14.70

Piper Sandler Companies has higher revenue and earnings than Oaktree Specialty Lending. Piper Sandler Companies 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 Piper Sandler Companies’ 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%
Piper Sandler Companies	14.51%	21.92%	14.60%

Dividends

Oaktree Specialty Lending pays an annual dividend of $1.20 per share and has a dividend yield of 9.9%. Piper Sandler Companies pays an annual dividend of $0.80 per share and has a dividend yield of 1.3%. 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. Piper Sandler Companies pays out 18.5% of its earnings in the form of a dividend. Piper Sandler Companies has increased its dividend for 1 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Oaktree Specialty Lending and Piper Sandler Companies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	1	7	0	0	1.88
Piper Sandler Companies	2	1	3	0	2.17

Oaktree Specialty Lending currently has a consensus target price of $11.83, indicating a potential downside of 2.53%. Piper Sandler Companies has a consensus target price of $90.81, indicating a potential upside of 42.99%. Given Piper Sandler Companies’ stronger consensus rating and higher probable upside, analysts clearly believe Piper Sandler Companies is more favorable than Oaktree Specialty Lending.

Insider & Institutional Ownership

36.8% of Oaktree Specialty Lending shares are owned by institutional investors. Comparatively, 72.8% of Piper Sandler Companies shares are owned by institutional investors. 0.3% of Oaktree Specialty Lending shares are owned by insiders. Comparatively, 3.1% of Piper Sandler Companies shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Piper Sandler Companies beats Oaktree Specialty Lending on 14 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 Piper Sandler Companies

Piper Sandler Companies operates as an investment bank and institutional securities firm that serves corporations, private equity groups, public entities, non-profit entities, and institutional investors in the United States and internationally. The company offers investment banking and institutional sales, trading, and research services for various equity and fixed income products. It provides advisory services, such as mergers and acquisitions, equity private placements, and debt and restructuring advisory; raises capital through equity and debt financings; underwrites municipal issuances; and offers municipal financial advisory and loan placement services, as well as various over-the-counter derivative products. The company also offers public finance investment banking services that focus on state and local governments, and cultural and social service non-profit entities, as well as the education, healthcare, hospitality, senior living, and transportation sectors. In addition, it provides equity and fixed income advisory and trade execution services for institutional investors, and government and non-profit entities. Further, the company is involved in the alternative asset management funds merchant banking and healthcare to invest firm capital and to manage capital from outside investors, as well as trading activities. The company was formerly known as Piper Jaffray Companies and changed its name to Piper Sandler Companies in January 2020. Piper Sandler Companies was founded in 1895 and is headquartered in Minneapolis, Minnesota.