Analyzing Oaktree Specialty Lending (NASDAQ:OCSL) and LM Funding America (NASDAQ:LMFA)

LM Funding America (NASDAQ:LMFA) and Oaktree Specialty Lending (NASDAQ:OCSL) are both small-cap financial services companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Volatility & Risk

LM Funding America has a beta of 1.4, indicating that its stock price is 40% more volatile than the S&P 500. Comparatively, Oaktree Specialty Lending has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500.

Institutional and Insider Ownership

22.7% of LM Funding America shares are owned by institutional investors. Comparatively, 36.8% of Oaktree Specialty Lending shares are owned by institutional investors. 20.2% of LM Funding America shares are owned by insiders. Comparatively, 0.3% of Oaktree Specialty Lending shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares LM Funding America and Oaktree Specialty Lending’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LM Funding America	$18.48 million	0.39	-$15.94 million	($4.14)	-0.69
Oaktree Specialty Lending	$70.19 million	19.87	$117.33 million	$1.34	12.78

Oaktree Specialty Lending has higher revenue and earnings than LM Funding America. LM Funding America 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.

Profitability

This table compares LM Funding America and Oaktree Specialty Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LM Funding America	-58.81%	-24.61%	-22.91%
Oaktree Specialty Lending	17.21%	11.98%	5.58%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for LM Funding America and Oaktree Specialty Lending, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LM Funding America	0	1	0	0	2.00
Oaktree Specialty Lending	0	4	2	0	2.33

Oaktree Specialty Lending has a consensus target price of $18.25, indicating a potential upside of 6.54%. Given Oaktree Specialty Lending’s stronger consensus rating and higher possible upside, analysts clearly believe Oaktree Specialty Lending is more favorable than LM Funding America.

Summary

Oaktree Specialty Lending beats LM Funding America on 12 of the 14 factors compared between the two stocks.

About LM Funding America

LM Funding America, Inc. operates as a cryptocurrency mining and specialty finance company. It operates through two segments, Specialty Finance and Mining Operations. The company also engages in Bitcoin mining operations; and provides funding to nonprofit community associations. The company was founded in 2008 and is based in Tampa, Florida.

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.