PennantPark Investment (NASDAQ: PNNT) and Oaktree Strategic Income (NASDAQ:OCSI) are both small-cap financials companies, but which is the better business? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, analyst recommendations, valuation and institutional ownership.
This table compares PennantPark Investment and Oaktree Strategic Income’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Oaktree Strategic Income||-18.88%||7.20%||3.72%|
This is a summary of recent recommendations for PennantPark Investment and Oaktree Strategic Income, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Oaktree Strategic Income||0||2||0||0||2.00|
PennantPark Investment currently has a consensus price target of $8.30, indicating a potential upside of 20.29%. Oaktree Strategic Income has a consensus price target of $9.25, indicating a potential upside of 19.66%. Given PennantPark Investment’s stronger consensus rating and higher possible upside, research analysts plainly believe PennantPark Investment is more favorable than Oaktree Strategic Income.
Volatility and Risk
PennantPark Investment has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Oaktree Strategic Income has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500.
Valuation & Earnings
This table compares PennantPark Investment and Oaktree Strategic Income’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|PennantPark Investment||$124.53 million||3.94||$61.71 million||$0.70||9.86|
|Oaktree Strategic Income||$46.57 million||4.89||-$8.76 million||($0.31)||-24.93|
PennantPark Investment has higher revenue and earnings than Oaktree Strategic Income. Oaktree Strategic Income is trading at a lower price-to-earnings ratio than PennantPark Investment, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
42.8% of PennantPark Investment shares are owned by institutional investors. Comparatively, 1.0% of Oaktree Strategic Income shares are owned by institutional investors. 2.0% of PennantPark Investment shares are owned by company insiders. Comparatively, 0.4% of Oaktree Strategic Income shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
PennantPark Investment pays an annual dividend of $0.72 per share and has a dividend yield of 10.4%. Oaktree Strategic Income pays an annual dividend of $0.76 per share and has a dividend yield of 9.8%. PennantPark Investment pays out 102.9% 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 pays out -245.2% of its earnings in the form of a dividend.
PennantPark Investment beats Oaktree Strategic Income on 14 of the 16 factors compared between the two stocks.
PennantPark Investment Company Profile
PennantPark Investment Corporation is a closed-end, non-diversified investment company. The Company is a business development company. Its objectives are to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments primarily made to the United States middle-market companies in the form of senior secured debt, mezzanine debt and equity investments. The Company’s debt investments may generally range in maturity from 3 to 10 years and, are made to the United States and to a limited extent, non-United States corporations, partnerships and other business entities, which operate in various industries and geographical regions. In addition, it may invest up to approximately 30% of its portfolio in non-qualifying assets. It invests in sectors, such as aerospace and defense; energy/utilities; auto sector; environmental services, and beverage, among others. PennantPark Investment Advisers, LLC is the Company’s investment advisor.
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.
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