Financial Contrast: Oaktree Specialty Lending (NASDAQ:OCSL) & Waton Financial (NASDAQ:WTF)

Oaktree Specialty Lending (NASDAQ:OCSL) and Waton Financial (NASDAQ:WTF) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.

Risk & Volatility

Oaktree Specialty Lending has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500. Comparatively, Waton Financial has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500.

Valuation & Earnings

This table compares Oaktree Specialty Lending and Waton Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$316.80 million	3.39	$33.92 million	$0.57	21.40
Waton Financial	$10.59 million	12.31	-$11.97 million	N/A	N/A

Oaktree Specialty Lending has higher revenue and earnings than Waton Financial.

Analyst Recommendations

This is a summary of current ratings and target prices for Oaktree Specialty Lending and Waton Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	0	5	0	0	2.00
Waton Financial	1	0	0	0	1.00

Oaktree Specialty Lending presently has a consensus target price of $11.83, suggesting a potential downside of 3.01%. Given Oaktree Specialty Lending’s stronger consensus rating and higher probable upside, equities analysts clearly believe Oaktree Specialty Lending is more favorable than Waton Financial.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Oaktree Specialty Lending	16.66%	9.56%	4.60%
Waton Financial	N/A	N/A	N/A

Institutional and Insider 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 endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Oaktree Specialty Lending beats Waton Financial on 9 of the 11 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 Waton Financial

Waton Financial Ltd. is a holding company, which engages in the provision of securities brokerage and financial technology services. It is also involved in software licensing and related support services including the licensing of trading platform app, upgrades and enhancements, maintenance, and other related services to financial institutions. The company was founded on June 25, 2010 and is headquartered in Hong Kong.