Sixth Street Specialty Lending (NYSE:TSLX – Get Free Report) and Value Line (NASDAQ:VALU – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, valuation, analyst recommendations, dividends, risk and institutional ownership.
Dividends
Sixth Street Specialty Lending pays an annual dividend of $1.68 per share and has a dividend yield of 9.9%. Value Line pays an annual dividend of $1.40 per share and has a dividend yield of 3.3%. Sixth Street Specialty Lending pays out 176.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Value Line pays out 66.4% of its earnings in the form of a dividend. Value Line has increased its dividend for 11 consecutive years.
Profitability
This table compares Sixth Street Specialty Lending and Value Line’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sixth Street Specialty Lending | 21.79% | 11.33% | 5.16% |
| Value Line | 60.27% | 18.43% | 13.14% |
Earnings & Valuation
This table compares Sixth Street Specialty Lending and Value Line”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sixth Street Specialty Lending | $132.14 million | 12.18 | $209.99 million | $0.95 | 17.83 |
| Value Line | $32.89 million | 12.16 | $21.63 million | $2.11 | 20.20 |
Sixth Street Specialty Lending has higher revenue and earnings than Value Line. Sixth Street Specialty Lending is trading at a lower price-to-earnings ratio than Value Line, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
70.3% of Sixth Street Specialty Lending shares are held by institutional investors. Comparatively, 6.3% of Value Line shares are held by institutional investors. 3.8% of Sixth Street Specialty Lending shares are held by insiders. Comparatively, 0.0% of Value Line shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Volatility and Risk
Sixth Street Specialty Lending has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, Value Line has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings and target prices for Sixth Street Specialty Lending and Value Line, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sixth Street Specialty Lending | 0 | 3 | 5 | 0 | 2.62 |
| Value Line | 0 | 1 | 0 | 0 | 2.00 |
Sixth Street Specialty Lending presently has a consensus target price of $19.83, indicating a potential upside of 17.10%. Given Sixth Street Specialty Lending’s stronger consensus rating and higher possible upside, equities analysts clearly believe Sixth Street Specialty Lending is more favorable than Value Line.
Summary
Sixth Street Specialty Lending beats Value Line on 9 of the 17 factors compared between the two stocks.
About Sixth Street Specialty Lending
Sixth Street Specialty Lending, Inc. (NYSE: TSLX) is a business development company. The fund provides senior secured loans (first-lien, second-lien, and unitranche), unsecured loans, mezzanine debt, and investments in corporate bonds and equity securities and structured products, non-control structured equity, and common equity with a focus on co-investments for organic growth, acquisitions, market or product expansion, restructuring initiatives, recapitalizations, and refinancing. The fund invests in business services, software & technology, healthcare, energy, consumer & retail, manufacturing, industrials, royalty related businesses, education, and specialty finance. It seeks to finance and lending to middle market companies principally located in the United States. The fund invests in companies with enterprise value between $50 million and $1 billion or more and EBITDA between $10 million and $250 million. The transaction size is between $15 million and $350 million. The fund invests across the spectrum of the capital structure and can arrange syndicated transactions of up to $500 million and hold sizeable positions within its credits.
About Value Line
Value Line, Inc. produces and sells investment periodicals and related publications. Its investment periodicals and related publications cover a range of investments, including stocks, mutual funds, exchange traded funds (ETFs), and options. The company's research services include The Value Line Investment Survey, The Value Line Investment Survey – Small and Mid-Cap, The Value Line 600, and The Value Line Fund Advisor Plus that provide statistical and text coverage of various investment securities, with an emphasis placed on its proprietary research, analysis, and statistical ranks. It also provides niche newsletters comprising Value Line Select: Dividend Income & Growth, Value Line Select: ETFs, The Value Line Special Situations Service, The Value Line M&A Service, The Value Line Climate Change Investing Service, and The Value Line Information You Should Know Wealth Newsletter that offer information on a less comprehensive basis for securities that are of particular interest to subscribers; digital versions of its products through its Website, www.valueline.com; The Value Line Research Center online platform; and investment analysis software, such as The Value Line Investment Analyzer and The New Value Line ETFs Service. In addition, the company offers current and historical financial databases comprising fundamental DataFile, estimates and projections, and mutual funds; and copyright products, which include unit investment trusts, variable annuities, managed accounts, and ETFs. Further, it operates as publishing unit for the investment related periodical publications and copyrights; places advertising on behalf of the company's publications; and distributes print publications. It serves individual and professional investors, as well as institutions, including municipal and university libraries, and investment firms. The company was founded in 1931 and is headquartered in New York, New York. Value Line, Inc. is a subsidiary of Arnold Bernhard & Co., Inc.
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