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Oaktree Specialty Lending (OCSL)
NASDAQ:OCSL
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Oaktree Specialty Lending
(NASDAQ:OCSL)
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Rating:59Neutral
Price Target:―
Oaktree Specialty Lending's overall performance reflects a stable yet challenging financial landscape. The robust balance sheet and high dividend yield are key strengths, but operational inefficiencies and technical weakness present notable risks. The recent earnings call highlights strategic initiatives yet underscores ongoing challenges, contributing to a moderate overall stock score.
Positive Factors
Robust Balance Sheet
A strong balance sheet with no debt provides financial stability and flexibility, allowing OCSL to navigate market challenges and invest in growth opportunities.
Strategic Refinancing
Successful refinancing efforts reduce interest expenses and extend debt maturity, enhancing financial stability and supporting long-term strategic initiatives.
Strong Investment Activity
Active investment in senior secured loans diversifies the portfolio and generates stable income, aligning with OCSL's strategy to provide tailored capital solutions.
Negative Factors
Increased Non-Accrual Investments
Rising non-accrual investments indicate potential credit quality issues, which could impact income generation and require increased focus on risk management.
Revenue Decline
Volatile revenue growth and recent declines suggest instability in income streams, necessitating strategic adjustments to stabilize and grow revenue.
Decreased Net Investment Income
A decline in net investment income reflects challenges in maintaining profitability, potentially affecting dividend sustainability and investor returns.
Oaktree Specialty Lending (OCSL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.17B
Dividend Yield13.28%
Average Volume (3M)833.60K
Price to Earnings (P/E)24.1
Beta (1Y)0.53
Revenue Growth-11.28%
EPS Growth-36.15%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)0.38
Shares Outstanding88,085,526
10 Day Avg. Volume767,717
30 Day Avg. Volume833,600
Financial Highlights & Ratios
PEG Ratio-0.41
Price to Book (P/B)0.88
Price to Sales (P/S)7.04
P/FCF Ratio68.76
Enterprise Value/Market Cap2.20
Enterprise Value/Revenue10.35
Enterprise Value/Gross Profit48.43
Enterprise Value/Ebitda24.91
Forecast
1Y Price Target
$13.17Price Target Upside-4.98% Downside
Rating ConsensusHold
Number of Analyst Covering3
Oaktree Specialty Lending Business Overview & Revenue Model
Company DescriptionOaktree Specialty Lending Corporation is a business development company 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, 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.
How the Company Makes MoneyOCSL makes money primarily through interest income generated from its portfolio of debt investments. As a BDC, the company lends capital to middle-market companies, charging interest on these loans, which serves as the main revenue stream. Additionally, OCSL may realize gains from equity investments, which can contribute to its earnings. The company also benefits from its strategic affiliation with Oaktree Capital Management, L.P., which provides management expertise and access to a broad network of industry contacts. This partnership can enhance deal flow and investment opportunities, ultimately supporting the company's revenue generation and growth.
Oaktree Specialty Lending Earnings Call Summary
Earnings Call Date:Aug 05, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Nov 18, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mix of positive outcomes and challenges. Key highlights included successful refinancing activities, reduction in nonaccruals, and promising investment opportunities. However, there were notable declines in adjusted net investment income and total investment income, along with market uncertainties affecting M&A activity. Overall, the positive developments were balanced by the challenges faced.Q3-2025 Updates
Positive Updates
NAV Increase and Nonaccrual Reduction
Net Asset Value (NAV) was up slightly this quarter. The company made progress in restructuring or exiting challenged names within the portfolio, reducing nonaccruals as a percentage of both fair value and cost.
Successful Refinancing Activities
OCSL successfully amended and extended the maturity of their senior secured revolving facility, reducing the interest rate from SOFR plus 2% to SOFR plus 1.75% to 1.875%. This allowed termination of a higher-cost ABL facility priced at SOFR plus 2.35%, reducing overall interest expense.
Strong Investment Opportunities Identified
OCSL is identifying more value in middle market lending, asset-backed financing, and life sciences, with increased opportunities in Europe supported by favorable valuation metrics.
Encouraging Nonaccrual Resolution
Telestream Holdings was removed from nonaccrual status after restructuring, and significant cash paydowns were received from Mosaic, contributing to the decline in nonaccruals.
Leveraged Joint Ventures for Returns
Joint ventures hold $442 million in investments, generating ROEs of 10.5% in aggregate, with leverage at 1.3x.
Negative Updates
Decline in Adjusted Net Investment Income
Adjusted net investment income declined to $0.37 per share from $0.45 per share in the prior quarter, primarily due to nonrecurring and noncash expenses related to refinancing activities and a decrease in nonrecurring income.
Challenges in Market Environment
Uncertainty around increased tariffs and potential impacts on inflation and monetary policy deterred M&A activity, resulting in most lending pivoting to refinancing rather than new buyouts.
BayMark Added to Nonaccrual List
BayMark, a substance abuse and recovery treatment provider, was added to the nonaccrual list due to operational issues and cash flow pressures.
Decline in Total Investment Income
Adjusted total investment income declined by $2.9 million compared to the prior quarter, due to a smaller average portfolio, tighter spreads, and lower dividend income from the Kemper JV.
Company Guidance
During Oaktree Specialty Lending Corporation's third fiscal quarter of 2025 call, several key metrics were addressed. The company's net asset value (NAV) slightly increased, while adjusted net investment income dropped to $0.37 per share due to nonrecurring and noncash refinancing activities. A base dividend of $0.40 per share was approved. The firm managed to reduce nonaccruals, and leverage reached its lowest level in three years at a net ratio of 0.93x. The weighted average yield on new debt investments was 9.1%, and the weighted average leverage in the portfolio slightly decreased to 5.1x. Meanwhile, the median EBITDA of portfolio companies rose to approximately $161 million. The company highlighted its focus on first lien loans and diversification, with significant investments in companies like Draken International and Lyons Magnus, emphasizing their strong market positions and recurring revenue. Oaktree's joint ventures held $442 million in investments, with leverage at 1.3x, and they generated an ROE of 10.5%. The conference call also noted that Oaktree Specialty Lending is actively pursuing opportunities in asset-backed financing and infrastructure debt, with a focus on high-quality companies in stable sectors.Oaktree Specialty Lending Financial Statement Overview
Summary
Oaktree Specialty Lending shows a mixed financial performance. Strong gross profit margins indicate efficient cost management, but operational challenges are evident with a negative EBIT margin. The balance sheet is robust with no debt, providing stability, yet profitability is modest. Cash flow is strong in operations but inconsistent in free cash flow growth.Income Statement
Oaktree Specialty Lending shows a mixed financial performance. The TTM gross profit margin is strong at 84.81%, indicating efficient cost management. However, the net profit margin for TTM is modest at 23.97%, and a negative EBIT margin of -29.24% suggests operational challenges. Revenue growth is volatile, with a significant decline in the latest annual report, indicating potential revenue instability.60
Neutral
Balance Sheet
The company's balance sheet is robust with no debt, resulting in a favorable debt-to-equity ratio of 0. The equity ratio is stable at around 47%, indicating a solid equity base. However, the return on equity is relatively low at 3.77% TTM, suggesting limited profitability relative to equity.75
Positive
Cash Flow
Oaktree Specialty Lending's cash flow statement reveals strong operating cash flow with an impressive operating cash flow to net income ratio of 5.89 for TTM. However, free cash flow growth is inconsistent, with a significant drop in the latest annual report, indicating potential cash flow management issues.50
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 248.30M | 186.23M | 379.29M | 39.11M | 248.31M | 52.31M |
| Gross Profit | 53.09M | 57.61M | 302.83M | -16.54M | 176.90M | 13.06M |
| EBITDA | 103.22M | 332.23M | -61.63M | 279.70M | 235.81M | 0.00 |
| Net Income | 46.26M | 57.91M | 117.33M | 29.22M | 237.26M | 39.22M |
Balance Sheet | ||||||
| Total Assets | 2.96B | 3.20B | 3.22B | 2.65B | 2.64B | 1.64B |
| Cash, Cash Equivalents and Short-Term Investments | 79.80M | 63.97M | 136.45M | 23.53M | 29.33M | 39.10M |
| Total Debt | 0.00 | 1.64B | 1.60B | 1.30B | 1.27B | 709.32M |
| Total Liabilities | 1.49B | 1.71B | 1.70B | 1.40B | 1.32B | 725.83M |
| Stockholders Equity | 1.48B | 1.49B | 1.52B | 1.25B | 1.31B | 914.88M |
Cash Flow | ||||||
| Free Cash Flow | 322.55M | 19.08M | 228.76M | 22.39M | -230.52M | -152.88M |
| Operating Cash Flow | 322.55M | 19.08M | 228.76M | 22.39M | -230.52M | -152.88M |
| Investing Cash Flow | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financing Cash Flow | -354.35M | -86.77M | -110.41M | -26.82M | 224.19M | 176.33M |
Oaktree Specialty Lending Technical Analysis
Positive
13.86
Price Trends
13.20
Positive
13.36
Positive
13.67
Positive
Market Momentum
0.02
Negative
66.19
Neutral
86.51
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OCSL, the sentiment is Positive. The current price of 13.86 is above the 20-day moving average (MA) of 12.97, above the 50-day MA of 13.20, and above the 200-day MA of 13.67, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 66.19 is Neutral, neither overbought nor oversold. The STOCH value of 86.51 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OCSL.
Oaktree Specialty Lending Risk Analysis
Oaktree Specialty Lending disclosed 70 risk factors in its most recent earnings report. Oaktree Specialty Lending reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Oaktree Specialty Lending Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $516.71M | 2.91 | 13.64% | 7.27% | 12.69% | -35.36% | |
74 Outperform | $1.65B | 4.41 | 18.75% | 4.12% | 8.41% | 34.76% | |
70 Outperform | $906.47M | 9.09 | 8.41% | 13.65% | -12.90% | -9.85% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
63 Neutral | $1.70B | 9.20 | 13.85% | 3.65% | 26.87% | 3.35% | |
59 Neutral | $1.17B | 24.06 | 3.11% | 13.28% | -11.28% | -36.15% | |
59 Neutral | $1.88B | 25.53 | 5.50% | ― | 7.54% | 70.26% |
* Financial Sector Average
OCSL
Oaktree Specialty Lending
13.86
-0.36
-2.53%
AGM
Federal Agricultural
161.67
-18.09
-10.06%
BBDC
Barings BDC
8.72
0.09
1.04%
LC
LendingClub
16.72
4.26
34.19%
YRD
Yiren Digital
6.05
0.66
12.24%
FINV
FinVolution Group
6.72
0.88
15.07%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.