Sixth Street Specialty Lending (NYSE:TSLX) versus Goldman Sachs BDC (NYSE:GSBD) Head-To-Head Contrast

Sixth Street Specialty Lending (NYSE:TSLX) and Goldman Sachs BDC (NYSE:GSBD) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Valuation & Earnings

This table compares Sixth Street Specialty Lending and Goldman Sachs BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sixth Street Specialty Lending	$240.98 million	8.34	$220.02 million	$2.04	10.43
Goldman Sachs BDC	$147.47 million	7.44	$62.87 million	$1.16	8.28

Sixth Street Specialty Lending has higher revenue and earnings than Goldman Sachs BDC. Goldman Sachs BDC is trading at a lower price-to-earnings ratio than Sixth Street Specialty Lending, indicating that it is currently the more affordable of the two stocks.

Dividends

Sixth Street Specialty Lending pays an annual dividend of $1.84 per share and has a dividend yield of 8.7%. Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 13.3%. Sixth Street Specialty Lending pays out 90.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Goldman Sachs BDC pays out 110.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Sixth Street Specialty Lending and Goldman Sachs BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sixth Street Specialty Lending	39.56%	13.47%	6.17%
Goldman Sachs BDC	36.17%	13.95%	6.17%

Risk and Volatility

Sixth Street Specialty Lending has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500. Comparatively, Goldman Sachs BDC has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sixth Street Specialty Lending and Goldman Sachs BDC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sixth Street Specialty Lending	0	2	7	1	2.90
Goldman Sachs BDC	2	1	0	0	1.33

Sixth Street Specialty Lending presently has a consensus target price of $23.50, indicating a potential upside of 10.48%. Goldman Sachs BDC has a consensus target price of $9.38, indicating a potential downside of 2.45%. Given Sixth Street Specialty Lending’s stronger consensus rating and higher possible upside, analysts plainly believe Sixth Street Specialty Lending is more favorable than Goldman Sachs BDC.

Institutional & Insider Ownership

70.3% of Sixth Street Specialty Lending shares are held by institutional investors. Comparatively, 28.7% of Goldman Sachs BDC shares are held by institutional investors. 3.2% of Sixth Street Specialty Lending shares are held by insiders. Comparatively, 0.1% of Goldman Sachs BDC shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Sixth Street Specialty Lending beats Goldman Sachs BDC on 14 of the 16 factors compared between the two stocks.

About Sixth Street Specialty Lending

Sixth Street Specialty Lending, Inc. (NYSE: TSLX) is a business development company. The fund provides senior secured loans (first-lien, second-lien, and unitranche), unsecured loans, mezzanine debt, and investments in corporate bonds and equity securities and structured products, non-control structured equity, and common equity with a focus on co-investments for organic growth, acquisitions, market or product expansion, restructuring initiatives, recapitalizations, and refinancing. The fund invests in business services, software & technology, healthcare, energy, consumer & retail, manufacturing, industrials, royalty related businesses, education, and specialty finance. It seeks to finance and lending to middle market companies principally located in the United States. The fund invests in companies with enterprise value between $50 million and $1 billion or more and EBITDA between $10 million and $250 million. The transaction size is between $15 million and $350 million. The fund invests across the spectrum of the capital structure and can arrange syndicated transactions of up to $500 million and hold sizeable positions within its credits.

About Goldman Sachs BDC

Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies. It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities. The fund primarily invests in United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.