Head-To-Head Analysis: Blackstone Secured Lending Fund (NYSE:BXSL) & OFS Capital (NASDAQ:OFS)

Blackstone Secured Lending Fund (NYSE:BXSL) and OFS Capital (NASDAQ:OFS) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Earnings & Valuation

This table compares Blackstone Secured Lending Fund and OFS Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blackstone Secured Lending Fund	$1.33 billion	4.34	$694.10 million	$2.66	9.37
OFS Capital	$8.01 million	7.46	$28.44 million	$0.24	18.58

Blackstone Secured Lending Fund has higher revenue and earnings than OFS Capital. Blackstone Secured Lending Fund is trading at a lower price-to-earnings ratio than OFS Capital, indicating that it is currently the more affordable of the two stocks.

Dividends

Blackstone Secured Lending Fund pays an annual dividend of $3.08 per share and has a dividend yield of 12.4%. OFS Capital pays an annual dividend of $0.68 per share and has a dividend yield of 15.2%. Blackstone Secured Lending Fund pays out 115.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. OFS Capital pays out 283.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. OFS Capital has raised its dividend for 3 consecutive years. OFS Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Blackstone Secured Lending Fund and OFS Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackstone Secured Lending Fund	1	2	6	0	2.56
OFS Capital	1	1	0	0	1.50

Blackstone Secured Lending Fund presently has a consensus target price of $29.13, indicating a potential upside of 16.87%. OFS Capital has a consensus target price of $7.00, indicating a potential upside of 56.95%. Given OFS Capital’s higher probable upside, analysts clearly believe OFS Capital is more favorable than Blackstone Secured Lending Fund.

Volatility and Risk

Blackstone Secured Lending Fund has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500. Comparatively, OFS Capital has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.

Profitability

This table compares Blackstone Secured Lending Fund and OFS Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackstone Secured Lending Fund	42.38%	11.85%	5.32%
OFS Capital	7.52%	8.95%	3.41%

Institutional & Insider Ownership

36.5% of Blackstone Secured Lending Fund shares are owned by institutional investors. Comparatively, 10.8% of OFS Capital shares are owned by institutional investors. 0.1% of Blackstone Secured Lending Fund shares are owned by insiders. Comparatively, 0.5% of OFS Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Blackstone Secured Lending Fund beats OFS Capital on 10 of the 17 factors compared between the two stocks.

About Blackstone Secured Lending Fund

Blackstone Secured Lending Fund is business development company and a Delaware statutory trust formed on March 26, 2018, and structured as an externally managed, non-diversified closed-end investment Fund. On October 26, 2018, the fund elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). In addition, the Fund elected to be treated for U.S. federal income tax purposes, as a regulated investment company (RIC), as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). The fund also intends to continue to comply with the requirements prescribed by the Code in order to maintain tax treatment as a RIC. The fund's investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. The Fund seeks to achieve its investment objective primarily through originated loans, equity and other securities, including syndicated loans, of private U.S. companies, specifically small and middle market companies, typically in the form of first lien senior secured and unitranche loans (including first out/last out loans), and to a lesser extent, second lien, third lien, unsecured and subordinated loans and other debt and equity securities.

About OFS Capital

OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It provides flexible capital solutions primarily through debt capital and to a lesser extent, minority equity investments serving the needs of U.S.-based middle-market companies across a broad array of industries. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, ownership transition, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies. It invests in the aerospace and defense, business services, consumer products and services, construction & building, durable goods, capital equipment, automotive, food and beverage, healthcare & pharmaceutical, specialty chemicals, transportation cargo and logistics, value added distribution, franchising, and industrial and niche manufacturing sectors. The firm invests in companies based in United States. It seeks to invest between $3 million and $35 million, revenues between $15 million and $300 million, annual EBITDA between $5 million and $50 million, and Enterprise value between $10 million and $500 million. The firm seeks to invest in companies with debt investment values between $5 million and $25 million. The fund uses senior secured, unitranche loans, first-lien, second lien, subordinated/ mezzanine loans, warrants, and preferred equity securities and common equity securities. It prefers to take a minority as well as majority stake in the investments made. It also co-invests with its partners for additional capital.