Contrasting Oaktree Specialty Lending (NASDAQ:OCSL) & Virtu Financial (NYSE:VIRT)

Oaktree Specialty Lending (NASDAQ:OCSL) and Virtu Financial (NYSE:VIRT) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Risk & Volatility

Oaktree Specialty Lending has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Virtu Financial has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Dividends

Oaktree Specialty Lending pays an annual dividend of $1.20 per share and has a dividend yield of 9.9%. Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 1.8%. Oaktree Specialty Lending pays out 250.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Virtu Financial pays out 15.9% of its earnings in the form of a dividend.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Oaktree Specialty Lending	14.45%	9.70%	4.64%
Virtu Financial	13.50%	49.06%	4.28%

Valuation and Earnings

This table compares Oaktree Specialty Lending and Virtu Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$53.53 million	19.88	$33.92 million	$0.48	25.17
Virtu Financial	$4.08 billion	2.00	$468.36 million	$6.02	8.72

Virtu Financial has higher revenue and earnings than Oaktree Specialty Lending. Virtu Financial 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 owned by institutional investors. Comparatively, 45.8% of Virtu Financial shares are owned by institutional investors. 0.3% of Oaktree Specialty Lending shares are owned by insiders. Comparatively, 46.8% of Virtu Financial shares are owned by 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.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Oaktree Specialty Lending and Virtu Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	0	6	0	0	2.00
Virtu Financial	1	2	3	1	2.57

Oaktree Specialty Lending presently has a consensus target price of $11.83, suggesting a potential downside of 2.04%. Virtu Financial has a consensus target price of $58.80, suggesting a potential upside of 12.06%. Given Virtu Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Virtu Financial is more favorable than Oaktree Specialty Lending.

Summary

Virtu Financial beats Oaktree Specialty Lending on 12 of the 17 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 Virtu Financial

Virtu Financial, Inc., a financial services company, provides data, analytics, and connectivity products to clients worldwide. The company operates in two segments, Market Making and Execution Services. Its product suite includes offerings in execution, liquidity sourcing, analytics and broker-neutral, and multi-dealer platforms in workflow technology. The company’s solutions enable clients to trade on various venues across countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income, cryptocurrencies, and other commodities. Its analytics platform provides a range of pre- and post-trade services, data products, and compliance tools for clients to invest, trade, and manage risk across markets. Virtu Financial, Inc. was founded in 2008 and is headquartered in New York, New York.