Head-To-Head Contrast: Oaktree Specialty Lending (OCSL) versus Regional Management (RM)

Oaktree Specialty Lending (NASDAQ: OCSL) and Regional Management (NYSE:RM) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, institutional ownership, profitability, dividends and earnings.

Profitability

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

Net Margins Return on Equity Return on Assets
Oaktree Specialty Lending -95.34% 6.74% 3.65%
Regional Management 11.09% 12.51% 3.72%

Dividends

Oaktree Specialty Lending pays an annual dividend of $0.34 per share and has a dividend yield of 6.9%. Regional Management does not pay a dividend. Oaktree Specialty Lending pays out 66.7% of its earnings in the form of a dividend.

Risk & Volatility

Oaktree Specialty Lending has a beta of 0.12, indicating that its stock price is 88% less volatile than the S&P 500. Comparatively, Regional Management has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500.

Valuation and Earnings

This table compares Oaktree Specialty Lending and Regional Management’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Oaktree Specialty Lending $177.96 million 3.92 -$196.96 million $0.51 9.71
Regional Management $272.46 million 1.56 $29.96 million $2.26 16.03

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Oaktree Specialty Lending and Regional Management, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oaktree Specialty Lending 0 4 3 0 2.43
Regional Management 0 4 2 0 2.33

Oaktree Specialty Lending presently has a consensus price target of $5.42, suggesting a potential upside of 9.43%. Regional Management has a consensus price target of $28.67, suggesting a potential downside of 20.88%. Given Oaktree Specialty Lending’s stronger consensus rating and higher possible upside, research analysts plainly believe Oaktree Specialty Lending is more favorable than Regional Management.

Insider & Institutional Ownership

42.5% of Oaktree Specialty Lending shares are held by institutional investors. Comparatively, 87.0% of Regional Management shares are held by institutional investors. 0.1% of Oaktree Specialty Lending shares are held by insiders. Comparatively, 9.5% of Regional Management shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Regional Management beats Oaktree Specialty Lending on 11 of the 16 factors compared between the two stocks.

Oaktree Specialty Lending Company Profile

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.

Regional Management Company Profile

Regional Management Corp., a diversified consumer finance company, provides various loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other traditional lenders. The company offers small and large installment loans; automobile purchase loans; loans to finance the purchase of furniture, appliances, and other retail products; insurance products, including credit life, credit accident and health, credit property, vehicle single interest, and credit involuntary unemployment insurance; collateral protection insurance; and property insurance, as well as reinsurance products. Its loan products are secured and structured on a fixed rate and fixed term basis with fully amortizing equal monthly installment payments repayable at any time without penalty. The company's loans are sourced through branches, direct mail campaigns, retailers, and digital partners, as well as its consumer Website. As of February 13, 2018, it operated through a network of 342 branches located in South Carolina, Texas, North Carolina, Tennessee, Alabama, Oklahoma, New Mexico, Georgia, and Virginia. The company was founded in 1987 and is headquartered in Greer, South Carolina.

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