Oaktree Specialty Lending (NASDAQ:OCSL) and LendingClub (NASDAQ:LC) Financial Comparison

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

Profitability

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

Net Margins Return on Equity Return on Assets
Oaktree Specialty Lending -86.32% 7.88% 4.67%
LendingClub -8.36% -2.94% -0.86%

Volatility & Risk

Oaktree Specialty Lending has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, LendingClub has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500.

Institutional and Insider Ownership

52.2% of Oaktree Specialty Lending shares are owned by institutional investors. Comparatively, 90.6% of LendingClub shares are owned by institutional investors. 0.2% of Oaktree Specialty Lending shares are owned by insiders. Comparatively, 4.5% of LendingClub shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for Oaktree Specialty Lending and LendingClub, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oaktree Specialty Lending 0 0 6 0 3.00
LendingClub 0 5 2 0 2.29

Oaktree Specialty Lending presently has a consensus target price of $5.29, suggesting a potential upside of 17.33%. LendingClub has a consensus target price of $12.43, suggesting a potential upside of 151.59%. Given LendingClub’s higher probable upside, analysts plainly believe LendingClub is more favorable than Oaktree Specialty Lending.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Oaktree Specialty Lending $147.70 million 4.30 $126.16 million $0.48 9.40
LendingClub $758.61 million 0.45 -$30.75 million $0.02 247.00

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

Summary

Oaktree Specialty Lending beats LendingClub on 8 of the 14 factors compared between the two stocks.

Oaktree Specialty Lending Company Profile

Oaktree Specialty Lending Corporation is a business development company specializing in investments in middle market, bridge financing, first and second lien debt financing, mezzanine debt, senior and junior secured debt, expansions, sponsor-led acquisitions, and management buyouts in small and mid-sized companies. The fund seeks to invest in education services, business services, retail and consumer, healthcare, manufacturing, food and restaurants, construction and engineering, and media and advertising 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 with 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.

LendingClub Company Profile

LendingClub Corporation operates an online lending marketplace platform that connects borrowers and investors in the United States. The company's marketplace facilitates various types of loan products for consumers and small businesses, including unsecured personal loans, unsecured education and patient installment loans, auto refinance loans, and small business loans. It also enables investors to invest in a range of loans based on term and credit. The company was founded in 2006 and is headquartered in San Francisco, California.

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