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Oaktree Specialty Lending (OCSL)
NASDAQ:OCSL
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Oaktree Specialty Lending
(NASDAQ:OCSL)
59Neutral
Positive Factors
Earnings
OCSL reported adjusted NOI of $0.55 per share, above the $0.53 estimate, helped by non-recurring items and discretionary incentive fee waivers.
Fee Waivers
OCSL voluntarily waived $1.2M of incentive management fees, which added to adjusted net investment income but was necessary to achieve full dividend coverage.
Negative Factors
Credit Quality
The number of investments on non-accrual status increased, indicating ongoing credit quality issues.
Dividend Sustainability
Oaktree Specialty Lending Corp. has minimal cushion on its dividend coverage, raising concerns about sustainability.
Net Asset Value
Net asset value continues to decline, driven by significant unrealized and realized losses.
Oaktree Specialty Lending (OCSL) vs. S&P 500 (SPY)
Market Cap
$1.18B
Dividend Yield14.87%
Average Volume (3M)876.82K
Price to Earnings (P/E)104.4
Beta (1Y)0.49
Revenue Growth-37.81%
EPS Growth-90.29%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength88
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)0.45
Shares Outstanding88,085,526
10 Day Avg. Volume731,327
30 Day Avg. Volume876,823
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap2.25
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit46.17
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.17Price Target Upside-4.50% 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 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 | ||||
| Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 57.61M | 379.29M | 39.11M | 248.31M | 52.31M | Gross Profit |
| 57.61M | 302.83M | -16.54M | 176.90M | 13.06M | EBIT |
| 303.67M | 292.42M | 79.79M | 240.84M | 37.45M | EBITDA |
| 332.23M | -61.63M | 279.70M | 235.81M | 0.00 | Net Income Common Stockholders |
| 57.91M | 117.33M | 29.22M | 237.26M | 39.22M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 63.97M | 145.54M | 23.53M | 29.33M | 39.10M | Total Assets |
| 3.20B | 3.22B | 2.65B | 2.64B | 1.64B | Total Debt |
| 0.00 | 1.60B | 1.30B | 1.27B | 709.32M | Net Debt |
| -63.97M | 1.46B | 1.28B | 1.24B | 670.22M | Total Liabilities |
| 1.71B | 1.70B | 1.40B | 1.32B | 725.83M | Stockholders Equity |
| 1.49B | 1.52B | 1.25B | 1.31B | 914.88M |
| Cash Flow | Free Cash Flow | |||
| 19.08M | 228.76M | 22.39M | -230.52M | -152.88M | Operating Cash Flow |
| 19.08M | 228.76M | 22.39M | -230.52M | -152.88M | Investing Cash Flow |
| 0.00 | 0.00 | -8.32M | -328.01M | -147.61M | Financing Cash Flow |
| -86.77M | -110.41M | -26.82M | 224.19M | 176.33M |
Oaktree Specialty Lending Technical Analysis
Negative
13.79
Price Trends
14.70
Negative
14.89
Negative
15.05
Negative
Market Momentum
-0.30
Positive
44.84
Neutral
25.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OCSL, the sentiment is Negative. The current price of 13.79 is below the 20-day moving average (MA) of 14.02, below the 50-day MA of 14.70, and below the 200-day MA of 15.05, indicating a bearish trend. The MACD of -0.30 indicates Positive momentum. The RSI at 44.84 is Neutral, neither overbought nor oversold. The STOCH value of 25.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $557.52M | 2.52 | 17.96% | 6.07% | 17.03% | -23.72% | |
70 Outperform | $1.44B | 9.16 | 10.77% | 1.87% | 10.06% | 0.04% | |
70 Outperform | $909.68M | 8.25 | 8.24% | 12.15% | 3.82% | -12.74% | |
66 Neutral | $1.86B | 10.75 | 13.51% | 3.21% | 26.19% | 3.95% | |
64 Neutral | $12.60B | 9.73 | 7.92% | 16985.68% | 12.21% | -5.55% | |
62 Neutral | $1.14B | 22.49 | 3.86% | ― | 5.72% | 31.82% | |
59 Neutral | $1.18B | 104.35 | 0.60% | 14.87% | -37.81% | -90.29% |
* Financial Sector Average
Performance Comparison
OCSL
Oaktree Specialty Lending
13.79
-3.20
-18.83%
AGM
Federal Agricultural
185.56
14.30
8.35%
BBDC
Barings BDC
8.56
-0.23
-2.62%
LC
LendingClub
10.58
1.41
15.38%
YRD
Yiren Digital
6.26
1.56
33.19%
LX
Lexinfintech Holdings
7.79
5.97
328.02%
Oaktree Specialty Lending Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q2-2025)
| % Change Since: -4.24%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed sentiment. There were notable achievements in capital redeployment, dividend maintenance, and strategic refinancing efforts, showing positive operational management. However, these were offset by significant challenges, including increased non-accrual investments, decreased net investment income, and market volatility due to tariffs, creating a challenging financial environment.Q2-2025 Updates
Positive Updates
Debt Repayment and Capital Redeployment
In April, Oaktree received nearly $100 million from debt repayments, all realized at small premiums compared to March valuations, allowing for capital redeployment into new income-generating investments.
Dividend Announcement
The board approved a base dividend of $0.40 per share and a variable supplemental dividend of $0.02 per share for the second quarter, aligned with the new dividend policy.
Successful Refinancing and Credit Facility Amendment
Issued new unsecured bonds maturing in 2030 and amended the senior secured revolving credit facility to extend maturity and reduce interest rates from SOFR plus 2% to a range of SOFR plus 1.75% to 1.875%.
Strong Investment Activity
Committed $407 million across 32 investments with a focus on senior secured loans, maintaining a diverse portfolio with 84% in senior secured loans and 81% in first lien loans.
Oaktree's Share Purchase and Management Fee Reduction
Oaktree purchased $100 million in OCSL shares and reduced the management fee to 1% on all assets to align interests with shareholders and enhance long-term earnings.
Negative Updates
Decrease in Adjusted Net Investment Income and Net Asset Value
Adjusted net investment income decreased to $39 million or $0.45 per share from $45 million or $0.54 per share in the previous quarter. Net asset value fell to $16.75 per share from $17.63.
Increased Non-Accrual Investments
Investments on non-accrual status rose to 4.6% of fair market value and 7.6% of cost, compared to 3.9% and 5.1% in the first quarter.
Significant Write-Downs
Mosaic Companies and SiO2 were moved to non-accrual status, resulting in write-downs of approximately 76% and 69%, respectively.
Challenges with Tariffs and Market Volatility
Increased market volatility and uncertainty due to tariffs impacting portfolio companies, with potential for further challenges in the coming quarters.
Company Guidance
During the second fiscal quarter of 2025, Oaktree Specialty Lending Corporation reported an adjusted net investment income of $39 million, or $0.45 per share, reflecting a decline from $45 million, or $0.54 per share, in the previous quarter. The net asset value decreased to $16.75 per share from $17.63 in the prior quarter. The portfolio's non-accrual status rose to 4.6% and 7.6% of fair market value and cost, respectively, compared to 3.9% and 5.1% in the first quarter. Despite challenges, the company made $407 million in capital commitments across 32 investments, with a weighted average yield of 9.5%. Oaktree successfully issued new unsecured bonds maturing in 2030 and amended its senior secured revolving credit facility to reduce interest rates. The board approved a base dividend of $0.40 per share and a variable supplemental dividend of $0.02 per share. The company's leverage ratio decreased to 0.93 times, providing ample liquidity for future investments.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.