Reviewing Santander Consumer USA (SC) and Oaktree Specialty Lending (OCSL)

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

Volatility and Risk

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Santander Consumer USA has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500. Comparatively, Oaktree Specialty Lending has a beta of 0.13, indicating that its stock price is 87% less volatile than the S&P 500.

Institutional and Insider Ownership

42.5% of Oaktree Specialty Lending shares are held by institutional investors. 0.4% of Santander Consumer USA shares are held by company insiders. Comparatively, 0.1% of Oaktree Specialty Lending shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Santander Consumer USA 18.09% 11.37% 1.70%
Oaktree Specialty Lending -95.68% 6.74% 3.58%

Earnings and Valuation

This table compares Santander Consumer USA and Oaktree Specialty Lending’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Santander Consumer USA $6.56 billion 0.87 $1.19 billion $1.74 9.10
Oaktree Specialty Lending $177.96 million 3.44 -$196.96 million $0.51 8.51

Santander Consumer USA has higher revenue and earnings than Oaktree Specialty Lending. Oaktree Specialty Lending is trading at a lower price-to-earnings ratio than Santander Consumer USA, indicating that it is currently the more affordable of the two stocks.

Dividends

Santander Consumer USA pays an annual dividend of $0.20 per share and has a dividend yield of 1.3%. Oaktree Specialty Lending pays an annual dividend of $0.34 per share and has a dividend yield of 7.8%. Santander Consumer USA pays out 11.5% of its earnings in the form of a dividend. Oaktree Specialty Lending pays out 66.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a summary of recent ratings and target prices for Santander Consumer USA and Oaktree Specialty Lending, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Santander Consumer USA 0 6 9 0 2.60
Oaktree Specialty Lending 0 4 3 0 2.43

Santander Consumer USA presently has a consensus price target of $18.65, indicating a potential upside of 17.84%. Oaktree Specialty Lending has a consensus price target of $5.42, indicating a potential upside of 24.81%. Given Oaktree Specialty Lending’s higher probable upside, analysts clearly believe Oaktree Specialty Lending is more favorable than Santander Consumer USA.

Summary

Santander Consumer USA beats Oaktree Specialty Lending on 11 of the 16 factors compared between the two stocks.

About Santander Consumer USA

Santander Consumer USA Holdings Inc. is the holding company for Santander Consumer USA Inc., and subsidiaries, a consumer finance company focused on vehicle finance and third party servicing. The Company operates through Consumer Finance segment. Its Consumer Finance business is focused on vehicle financial products and services, including retail installment contracts, vehicle leases, and dealer loans, as well as financial products and services related to motorcycles, recreational vehicles (RVs), and marine vehicles. It also includes its personal loan and point-of-sale financing operations. The Company’s primary business is the indirect origination and securitization of retail installment contracts, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers. The Company offers auto financing products and services to Fiat Chrysler Automobiles US LLC (FCA) customers and dealers under the Chrysler Capital brand.

About Oaktree Specialty Lending

Oaktree Specialty Lending Corporation, formerly Fifth Street Finance Corp., is a specialty finance company. The Company is focused on providing customized one-stop credit solutions to companies with limited access to public or syndicated capital markets. The Company provides companies with flexible financing solutions including first and second lien loans, unsecured and mezzanine loans, and preferred equity. The company acts as a business development company. The Company serves various industries, including Internet software and services, healthcare services, multi-sector holdings, advertising, healthcare equipment, pharmaceuticals, construction and engineering, research and consulting services, and industrial machinery. The Company’s investment advisor is Oaktree Capital Management, L.P.

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