Critical Analysis: WhiteHorse Finance (NASDAQ:WHF) versus Blackstone Secured Lending Fund (NYSE:BXSL)

WhiteHorse Finance (NASDAQ:WHF) and Blackstone Secured Lending Fund (NYSE:BXSL) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Valuation and Earnings

This table compares WhiteHorse Finance and Blackstone Secured Lending Fund”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WhiteHorse Finance	$72.67 million	2.01	$14.34 million	$0.41	16.49
Blackstone Secured Lending Fund	$1.42 billion	3.81	$563.46 million	$1.91	12.17

Blackstone Secured Lending Fund has higher revenue and earnings than WhiteHorse Finance. Blackstone Secured Lending Fund is trading at a lower price-to-earnings ratio than WhiteHorse Finance, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

WhiteHorse Finance has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, Blackstone Secured Lending Fund has a beta of 0.38, suggesting that its stock price is 62% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for WhiteHorse Finance and Blackstone Secured Lending Fund, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WhiteHorse Finance	1	4	0	0	1.80
Blackstone Secured Lending Fund	1	3	5	0	2.44

WhiteHorse Finance presently has a consensus price target of $7.75, indicating a potential upside of 14.64%. Blackstone Secured Lending Fund has a consensus price target of $25.13, indicating a potential upside of 8.09%. Given WhiteHorse Finance’s higher probable upside, analysts clearly believe WhiteHorse Finance is more favorable than Blackstone Secured Lending Fund.

Insider & Institutional Ownership

13.2% of WhiteHorse Finance shares are held by institutional investors. Comparatively, 36.5% of Blackstone Secured Lending Fund shares are held by institutional investors. 2.5% of WhiteHorse Finance shares are held by insiders. Comparatively, 0.1% of Blackstone Secured Lending Fund shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

WhiteHorse Finance pays an annual dividend of $1.00 per share and has a dividend yield of 14.8%. Blackstone Secured Lending Fund pays an annual dividend of $3.08 per share and has a dividend yield of 13.3%. WhiteHorse Finance pays out 243.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blackstone Secured Lending Fund pays out 161.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WhiteHorse Finance has raised its dividend for 3 consecutive years. WhiteHorse Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares WhiteHorse Finance and Blackstone Secured Lending Fund’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WhiteHorse Finance	13.46%	9.47%	3.95%
Blackstone Secured Lending Fund	31.63%	11.73%	5.12%

Summary

Blackstone Secured Lending Fund beats WhiteHorse Finance on 12 of the 17 factors compared between the two stocks.

About WhiteHorse Finance

WhiteHorse Finance, Inc. is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries. It invests in broadline retail, office services and supplies, building products, health care services, health care supplies, research and consulting services, application software, home furnishings, specialized consumer services, data processing and outsourced services, leisure facilities, cable, and satellite. It prefers to invest in United States. It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.

About Blackstone Secured Lending Fund

Blackstone Secured Lending Fund is business development company and a Delaware statutory trust formed on March 26, 2018, and structured as an externally managed, non-diversified closed-end investment Fund. On October 26, 2018, the fund elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). In addition, the Fund elected to be treated for U.S. federal income tax purposes, as a regulated investment company (RIC), as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). The fund also intends to continue to comply with the requirements prescribed by the Code in order to maintain tax treatment as a RIC. The fund's investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. The Fund seeks to achieve its investment objective primarily through originated loans, equity and other securities, including syndicated loans, of private U.S. companies, specifically small and middle market companies, typically in the form of first lien senior secured and unitranche loans (including first out/last out loans), and to a lesser extent, second lien, third lien, unsecured and subordinated loans and other debt and equity securities.