Hut 8 (NASDAQ:HUT) and Oaktree Specialty Lending (NASDAQ:OCSL) Financial Analysis

Oaktree Specialty Lending (NASDAQ:OCSL) and Hut 8 (NASDAQ:HUT) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, analyst recommendations, dividends, institutional ownership and profitability.

Analyst Ratings

This is a breakdown of current ratings and target prices for Oaktree Specialty Lending and Hut 8, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	1	6	0	0	1.86
Hut 8	0	1	16	2	3.05

Oaktree Specialty Lending presently has a consensus price target of $14.25, suggesting a potential upside of 10.38%. Hut 8 has a consensus price target of $56.76, suggesting a potential downside of 5.46%. Given Oaktree Specialty Lending’s higher possible upside, analysts clearly believe Oaktree Specialty Lending is more favorable than Hut 8.

Profitability

This table compares Oaktree Specialty Lending and Hut 8’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oaktree Specialty Lending	10.71%	10.31%	4.99%
Hut 8	115.39%	8.06%	5.18%

Risk and Volatility

Oaktree Specialty Lending has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500. Comparatively, Hut 8 has a beta of 4.41, meaning that its share price is 341% more volatile than the S&P 500.

Valuation & Earnings

This table compares Oaktree Specialty Lending and Hut 8″s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$24.95 million	45.58	$33.92 million	$0.39	33.10
Hut 8	$162.38 million	39.95	$331.88 million	($0.39)	-153.95

Hut 8 has higher revenue and earnings than Oaktree Specialty Lending. Hut 8 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.

Insider & Institutional Ownership

36.8% of Oaktree Specialty Lending shares are held by institutional investors. Comparatively, 31.8% of Hut 8 shares are held by institutional investors. 0.3% of Oaktree Specialty Lending shares are held by insiders. Comparatively, 11.2% of Hut 8 shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Hut 8 beats Oaktree Specialty Lending on 9 of the 15 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 Hut 8

Hut 8 Corp., together with its subsidiaries, acquires, builds, manages, and operates data centers for digital assets mining, computing, and artificial intelligence in the United States. It operates in four segments: Digital Assets Mining, Managed Services, High Performance Computing Colocation and Cloud, and Other. The company mines Bitcoin. It also offers managed services for energy infrastructure development, such as site design, procurement, and construction management; software automation, process design, personnel hiring, and team training; utilities contracts, hosting operations, and customer management; energy portfolio optimization and strategic initiatives; and finance, accounting, and safety services for digital asset mining site owners, governments, and data center developers. In addition, the company provides colocation, cloud, and connectivity services; hosting services, which include the provision of mining equipment and space, as well as monitors, troubleshoots, repairs, and maintains customer mining equipment; and equipment sales and repair services. Hut 8 Corp. was founded in 2017 and is based in Miami, Florida.