Comparing Atlanticus (NASDAQ:ATLCP) & Oaktree Specialty Lending (NASDAQ:OCSL)

Oaktree Specialty Lending (NASDAQ:OCSL) and Atlanticus (NASDAQ:ATLCP) are both financial services companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a summary of current recommendations and price targets for Oaktree Specialty Lending and Atlanticus, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	0	4	2	0	2.33
Atlanticus	0	0	0	0	N/A

Oaktree Specialty Lending currently has a consensus target price of $18.25, suggesting a potential upside of 7.73%. Given Oaktree Specialty Lending’s higher possible upside, research analysts plainly believe Oaktree Specialty Lending is more favorable than Atlanticus.

Insider and Institutional Ownership

36.8% of Oaktree Specialty Lending shares are owned by institutional investors. 0.3% of Oaktree Specialty Lending shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Oaktree Specialty Lending and Atlanticus’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$70.19 million	19.65	$117.33 million	$1.34	12.64
Atlanticus	$262.48 million	N/A	N/A	N/A	N/A

Oaktree Specialty Lending has higher earnings, but lower revenue than Atlanticus.

Dividends

Oaktree Specialty Lending pays an annual dividend of $2.20 per share and has a dividend yield of 13.0%. Atlanticus pays an annual dividend of $1.91 per share and has a dividend yield of 8.4%. Oaktree Specialty Lending pays out 164.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Oaktree Specialty Lending	17.21%	11.98%	5.58%
Atlanticus	N/A	N/A	N/A

Summary

Oaktree Specialty Lending beats Atlanticus on 8 of the 10 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 Atlanticus

Atlanticus Holdings Corporation, a financial technology company, provides credit and related financial services and products to customers the United States. It operates in two segments, Credit as a Service, and Auto Finance. The Credit as a Service segment originates a range of consumer loan products, such as private label and general purpose credit cards originated by lenders through various channels, including retail and healthcare, direct mail solicitation, digital marketing, and partnerships with third parties; and offers credit to their customers for the purchase of various goods and services, including consumer electronics, furniture, elective medical procedures, healthcare, and home-improvements by partnering with retailers, healthcare providers, and other service providers. This segment also offers loan servicing, such as risk management and customer service outsourcing for third parties; and engages in testing and investment activities in consumer finance technology platforms. The Auto Finance segment purchases and/or services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, and used car business. This segment also provides floor plan financing and installment lending products. It also invests in and services portfolios of credit card receivables. The company was founded in 1996 and is headquartered in Atlanta, Georgia.