Reviewing Eagle Point Credit (ECC) & Oaktree Strategic Income (OCSI)

Eagle Point Credit (NYSE: ECC) and Oaktree Strategic Income (NASDAQ:OCSI) are both small-cap financials companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, analyst recommendations, valuation, profitability, risk and institutional ownership.

Dividends

Eagle Point Credit pays an annual dividend of $2.40 per share and has a dividend yield of 13.3%. Oaktree Strategic Income pays an annual dividend of $0.76 per share and has a dividend yield of 9.8%. Oaktree Strategic Income pays out -281.5% of its earnings in the form of a dividend.

Profitability

This table compares Eagle Point Credit and Oaktree Strategic Income’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eagle Point Credit 65.86% 10.73% 7.07%
Oaktree Strategic Income -16.64% 6.83% 3.48%

Volatility and Risk

Eagle Point Credit has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, Oaktree Strategic Income has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.

Insider & Institutional Ownership

56.6% of Eagle Point Credit shares are owned by institutional investors. Comparatively, 1.4% of Oaktree Strategic Income shares are owned by institutional investors. 0.6% of Eagle Point Credit shares are owned by company insiders. Comparatively, 0.4% of Oaktree Strategic Income shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Eagle Point Credit and Oaktree Strategic Income’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Eagle Point Credit $55.84 million 5.98 $90.58 million N/A N/A
Oaktree Strategic Income $46.57 million 4.89 -$8.76 million ($0.27) -28.63

Eagle Point Credit has higher revenue and earnings than Oaktree Strategic Income.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Eagle Point Credit and Oaktree Strategic Income, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eagle Point Credit 0 0 4 0 3.00
Oaktree Strategic Income 0 2 0 0 2.00

Eagle Point Credit presently has a consensus target price of $21.13, suggesting a potential upside of 16.84%. Oaktree Strategic Income has a consensus target price of $9.25, suggesting a potential upside of 19.66%. Given Oaktree Strategic Income’s higher probable upside, analysts plainly believe Oaktree Strategic Income is more favorable than Eagle Point Credit.

Summary

Eagle Point Credit beats Oaktree Strategic Income on 12 of the 15 factors compared between the two stocks.

Eagle Point Credit Company Profile

Eagle Point Credit Company Inc. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to generate high current income, with a secondary objective to generate capital appreciation. The Company primarily invests in equity and junior debt tranches of collateralized loan obligations (CLOs) that are collateralized by a portfolio consisting primarily of the below investment grade United States senior secured loans. It may also invest in other securities and instruments related to these investments. The Company’s portfolio includes its investments in various industries, such as business equipment and services; healthcare; electronics/electrical; leisure goods/activities/movies; retailers (except food and drug); chemicals and plastics; telecommunications; financial intermediaries, and utilities. The Company’s advisor is Eagle Point Credit Management LLC.

Oaktree Strategic Income Company Profile

Oaktree Strategic Income Corporation, formerly Fifth Street Senior Floating Rate Corp., is a closed-end, non-diversified management investment company. The Company operates as a specialty finance company. The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments while seeking to preserve its capital. The Company invests in senior secured loans, including first lien, unitranche and second lien debt instruments. The Company may also invest in unsecured loans, including subordinated loans, issued by private middle market companies, and senior and subordinated loans issued by public companies and equity investments. The senior loans that the Company targets have final maturities of 4 to 7 years. The Company seeks to invest in senior loans made primarily to private middle market companies. The Company’s investment advisor is Oaktree Capital Management, L.P.

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