Oaktree Strategic Income (NASDAQ: OCSI) and Fidus Investment (NASDAQ:FDUS) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.
Oaktree Strategic Income pays an annual dividend of $0.76 per share and has a dividend yield of 9.6%. Fidus Investment pays an annual dividend of $1.56 per share and has a dividend yield of 12.1%. Oaktree Strategic Income pays out -281.5% of its earnings in the form of a dividend. Fidus Investment pays out 83.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Oaktree Strategic Income has a beta of 0.29, suggesting that its stock price is 71% less volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.
This is a summary of current ratings and price targets for Oaktree Strategic Income and Fidus Investment, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Oaktree Strategic Income||0||2||0||0||2.00|
Oaktree Strategic Income currently has a consensus price target of $9.25, suggesting a potential upside of 17.39%. Fidus Investment has a consensus price target of $18.00, suggesting a potential upside of 39.97%. Given Fidus Investment’s stronger consensus rating and higher probable upside, analysts plainly believe Fidus Investment is more favorable than Oaktree Strategic Income.
Valuation & Earnings
This table compares Oaktree Strategic Income and Fidus Investment’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Oaktree Strategic Income||$46.57 million||4.99||-$8.76 million||($0.27)||-29.18|
|Fidus Investment||$68.61 million||4.59||$43.95 million||$1.86||6.91|
Fidus Investment has higher revenue and earnings than Oaktree Strategic Income. Oaktree Strategic Income is trading at a lower price-to-earnings ratio than Fidus Investment, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
26.9% of Oaktree Strategic Income shares are held by institutional investors. Comparatively, 31.4% of Fidus Investment shares are held by institutional investors. 0.4% of Oaktree Strategic Income shares are held by company insiders. Comparatively, 1.3% of Fidus Investment shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares Oaktree Strategic Income and Fidus Investment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Oaktree Strategic Income||-16.64%||6.93%||3.47%|
Fidus Investment beats Oaktree Strategic Income on 14 of the 16 factors compared between the two stocks.
Oaktree Strategic Income Company Profile
Oaktree Strategic Income Corporation, formerly Fifth Street Senior Floating Rate Corp., is a closed-end, non-diversified management investment company. The Company operates as a specialty finance company. The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments while seeking to preserve its capital. The Company invests in senior secured loans, including first lien, unitranche and second lien debt instruments. The Company may also invest in unsecured loans, including subordinated loans, issued by private middle market companies, and senior and subordinated loans issued by public companies and equity investments. The senior loans that the Company targets have final maturities of 4 to 7 years. The Company seeks to invest in senior loans made primarily to private middle market companies. The Company’s investment advisor is Oaktree Capital Management, L.P.
Fidus Investment Company Profile
Fidus Investment Corporation is a closed-end, non-diversified investment company. The Company provides customized debt and equity financing solutions to lower middle-market companies. The Company’s investment objective is to provide attractive risk-adjusted returns by generating both current income from its debt investments and capital appreciation from its equity-related investments. The Company typically invests in mezzanine debt, which includes senior subordinated notes and junior secured loans. The Company structures some of its debt investments as senior secured or unitranche loans. The Company’s equity securities typically consist of either a direct minority equity investment in common or preferred stock or membership/partnership interests of a portfolio company, or it may receive warrants to buy a minority equity interest in a portfolio company in connection with a debt investment. Its investment activities are managed by Fidus Investment Advisors, LLC, its investment advisor.
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