Head-To-Head Comparison: Chicago Atlantic BDC (NASDAQ:LIEN) versus Sixth Street Specialty Lending (NYSE:TSLX)

Sixth Street Specialty Lending (NYSE:TSLXGet Free Report) and Chicago Atlantic BDC (NASDAQ:LIENGet Free Report) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, valuation, profitability, dividends, risk and analyst recommendations.

Profitability

This table compares Sixth Street Specialty Lending and Chicago Atlantic BDC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sixth Street Specialty Lending 36.59% 13.60% 6.22%
Chicago Atlantic BDC 4.83% 0.98% 0.94%

Insider & Institutional Ownership

70.3% of Sixth Street Specialty Lending shares are held by institutional investors. Comparatively, 4.4% of Chicago Atlantic BDC shares are held by institutional investors. 3.2% of Sixth Street Specialty Lending shares are held by insiders. Comparatively, 16.9% of Chicago Atlantic BDC shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Sixth Street Specialty Lending pays an annual dividend of $1.84 per share and has a dividend yield of 7.9%. Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 14.0%. Sixth Street Specialty Lending pays out 97.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chicago Atlantic BDC pays out 680.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Sixth Street Specialty Lending and Chicago Atlantic BDC”s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sixth Street Specialty Lending $482.53 million 4.51 $220.02 million $1.89 12.25
Chicago Atlantic BDC $21.67 million 10.23 $9.62 million $0.20 48.55

Sixth Street Specialty Lending has higher revenue and earnings than Chicago Atlantic BDC. Sixth Street Specialty Lending is trading at a lower price-to-earnings ratio than Chicago Atlantic BDC, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Sixth Street Specialty Lending and Chicago Atlantic BDC, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sixth Street Specialty Lending 0 1 6 1 3.00
Chicago Atlantic BDC 0 2 0 0 2.00

Sixth Street Specialty Lending presently has a consensus price target of $22.81, indicating a potential downside of 1.48%. Given Sixth Street Specialty Lending’s stronger consensus rating and higher possible upside, analysts clearly believe Sixth Street Specialty Lending is more favorable than Chicago Atlantic BDC.

Volatility & Risk

Sixth Street Specialty Lending has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, Chicago Atlantic BDC has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500.

Summary

Sixth Street Specialty Lending beats Chicago Atlantic BDC on 13 of the 17 factors compared between the two stocks.

About Sixth Street Specialty Lending

(Get Free Report)

Sixth Street Specialty Lending, Inc. (NYSE: TSLX) is a business development company. The fund provides senior secured loans (first-lien, second-lien, and unitranche), unsecured loans, mezzanine debt, and investments in corporate bonds and equity securities and structured products, non-control structured equity, and common equity with a focus on co-investments for organic growth, acquisitions, market or product expansion, restructuring initiatives, recapitalizations, and refinancing. The fund invests in business services, software & technology, healthcare, energy, consumer & retail, manufacturing, industrials, royalty related businesses, education, and specialty finance. It seeks to finance and lending to middle market companies principally located in the United States. The fund invests in companies with enterprise value between $50 million and $1 billion or more and EBITDA between $10 million and $250 million. The transaction size is between $15 million and $350 million. The fund invests across the spectrum of the capital structure and can arrange syndicated transactions of up to $500 million and hold sizeable positions within its credits.

About Chicago Atlantic BDC

(Get Free Report)

Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.

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