LM Funding America (NASDAQ:LMFA – Get Free Report) and Oaktree Specialty Lending (NASDAQ:OCSL – Get Free Report) are both small-cap financial services companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.
Profitability
This table compares LM Funding America and Oaktree Specialty Lending’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| LM Funding America | -58.81% | -24.61% | -22.91% |
| Oaktree Specialty Lending | 17.21% | 11.98% | 5.58% |
Insider & Institutional Ownership
22.7% of LM Funding America shares are owned by institutional investors. Comparatively, 36.8% of Oaktree Specialty Lending shares are owned by institutional investors. 20.2% of LM Funding America shares are owned by insiders. Comparatively, 0.3% of Oaktree Specialty Lending shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Volatility & Risk
Analyst Ratings
This is a breakdown of current ratings and recommmendations for LM Funding America and Oaktree Specialty Lending, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| LM Funding America | 0 | 1 | 0 | 0 | 2.00 |
| Oaktree Specialty Lending | 0 | 3 | 3 | 0 | 2.50 |
Oaktree Specialty Lending has a consensus target price of $18.42, indicating a potential upside of 8.21%. Given Oaktree Specialty Lending’s stronger consensus rating and higher probable upside, analysts clearly believe Oaktree Specialty Lending is more favorable than LM Funding America.
Earnings & Valuation
This table compares LM Funding America and Oaktree Specialty Lending’s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| LM Funding America | $18.48 million | 0.43 | -$15.94 million | ($4.14) | -0.78 |
| Oaktree Specialty Lending | $70.19 million | 19.74 | $117.33 million | $1.34 | 12.70 |
Oaktree Specialty Lending has higher revenue and earnings than LM Funding America. LM Funding America 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.
Summary
Oaktree Specialty Lending beats LM Funding America on 12 of the 14 factors compared between the two stocks.
About LM Funding America
LM Funding America, Inc. operates as a cryptocurrency mining and specialty finance company. It operates through two segments, Specialty Finance and Mining Operations. The company also engages in Bitcoin mining operations; and provides funding to nonprofit community associations. The company was founded in 2008 and is based in Tampa, Florida.
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.
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