Great Elm Capital Group (NASDAQ:GECC – Get Free Report) and Oaktree Specialty Lending (NASDAQ:OCSL – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.
Risk and Volatility
Great Elm Capital Group has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500. Comparatively, Oaktree Specialty Lending has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.
Analyst Ratings
This is a summary of recent recommendations and price targets for Great Elm Capital Group and Oaktree Specialty Lending, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Great Elm Capital Group | 1 | 3 | 0 | 0 | 1.75 |
| Oaktree Specialty Lending | 1 | 6 | 0 | 0 | 1.86 |
Great Elm Capital Group presently has a consensus price target of $10.00, suggesting a potential upside of 110.53%. Oaktree Specialty Lending has a consensus price target of $11.83, suggesting a potential upside of 3.44%. Given Great Elm Capital Group’s higher possible upside, equities research analysts clearly believe Great Elm Capital Group is more favorable than Oaktree Specialty Lending.
Dividends
Great Elm Capital Group pays an annual dividend of $1.00 per share and has a dividend yield of 21.1%. Oaktree Specialty Lending pays an annual dividend of $1.20 per share and has a dividend yield of 10.5%. Great Elm Capital Group pays out -33.9% of its earnings in the form of a dividend. Oaktree Specialty Lending pays out 250.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Great Elm Capital Group has increased its dividend for 2 consecutive years. Great Elm Capital Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Great Elm Capital Group and Oaktree Specialty Lending’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Great Elm Capital Group | -87.74% | 13.87% | 4.93% |
| Oaktree Specialty Lending | 14.45% | 9.70% | 4.64% |
Institutional and Insider Ownership
38.8% of Great Elm Capital Group shares are held by institutional investors. Comparatively, 36.8% of Oaktree Specialty Lending shares are held by institutional investors. 3.9% of Great Elm Capital Group shares are held by company insiders. Comparatively, 0.3% of Oaktree Specialty Lending shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Earnings & Valuation
This table compares Great Elm Capital Group and Oaktree Specialty Lending”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Great Elm Capital Group | $49.99 million | 1.32 | -$31.79 million | ($2.95) | -1.61 |
| Oaktree Specialty Lending | $316.80 million | 3.18 | $33.92 million | $0.48 | 23.83 |
Oaktree Specialty Lending has higher revenue and earnings than Great Elm Capital Group. Great Elm Capital Group 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.
Summary
Great Elm Capital Group beats Oaktree Specialty Lending on 9 of the 16 factors compared between the two stocks.
About Great Elm Capital Group
Great Elm Capital Corp. is a business development company which specializes in loan and mezzanine, middle market investments. It invests in the debt instruments of middle market companies. The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment. It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.
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.
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