Head to Head Analysis: Oaktree Specialty Lending (NASDAQ:OCSL) & Pagaya Technologies (NASDAQ:PGY)

Oaktree Specialty Lending (NASDAQ:OCSL) and Pagaya Technologies (NASDAQ:PGY) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares Oaktree Specialty Lending and Pagaya Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oaktree Specialty Lending	10.58%	9.75%	4.70%
Pagaya Technologies	6.25%	44.24%	15.58%

Earnings and Valuation

This table compares Oaktree Specialty Lending and Pagaya Technologies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oaktree Specialty Lending	$316.80 million	3.31	$33.92 million	$0.36	33.09
Pagaya Technologies	$1.26 billion	0.78	$81.39 million	$0.89	13.35

Pagaya Technologies has higher revenue and earnings than Oaktree Specialty Lending. Pagaya Technologies is trading at a lower price-to-earnings ratio than Oaktree Specialty Lending, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and price targets for Oaktree Specialty Lending and Pagaya Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oaktree Specialty Lending	1	5	0	0	1.83
Pagaya Technologies	0	2	9	1	2.92

Oaktree Specialty Lending presently has a consensus price target of $12.17, indicating a potential upside of 2.14%. Pagaya Technologies has a consensus price target of $33.11, indicating a potential upside of 178.71%. Given Pagaya Technologies’ stronger consensus rating and higher possible upside, analysts clearly believe Pagaya Technologies is more favorable than Oaktree Specialty Lending.

Volatility & Risk

Oaktree Specialty Lending has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500. Comparatively, Pagaya Technologies has a beta of 5.74, meaning that its stock price is 474% more volatile than the S&P 500.

Institutional and Insider Ownership

36.8% of Oaktree Specialty Lending shares are owned by institutional investors. Comparatively, 57.1% of Pagaya Technologies shares are owned by institutional investors. 0.3% of Oaktree Specialty Lending shares are owned by company insiders. Comparatively, 47.6% of Pagaya Technologies shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Pagaya Technologies beats Oaktree Specialty Lending on 12 of the 15 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 Pagaya Technologies

Pagaya Technologies Ltd., a product-focused technology company, deploys data science and proprietary artificial intelligence-powered technology for financial institutions and investors in the United States, Israel, the Cayman Islands, and internationally. The company develops and implements proprietary artificial intelligence technology and related software solutions to assist partners to originate loans and other assets. Its partners include high-growth financial technology companies, incumbent banks and financial institutions, auto finance providers, and residential real estate service providers. Pagaya Technologies Ltd. was incorporated in 2016 and is headquartered in New York, New York.