LendingClub (NYSE:LC) and Oaktree Specialty Lending (NASDAQ:OCSL) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Risk and Volatility

LendingClub has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, Oaktree Specialty Lending has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for LendingClub and Oaktree Specialty Lending, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LendingClub 0 5 2 0 2.29
Oaktree Specialty Lending 0 0 6 0 3.00

LendingClub currently has a consensus price target of $12.43, indicating a potential upside of 171.37%. Oaktree Specialty Lending has a consensus price target of $5.29, indicating a potential upside of 19.45%. Given LendingClub’s higher probable upside, analysts clearly believe LendingClub is more favorable than Oaktree Specialty Lending.

Profitability

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

Net Margins Return on Equity Return on Assets
LendingClub -8.36% -2.94% -0.86%
Oaktree Specialty Lending -86.32% 7.88% 4.67%

Insider and Institutional Ownership

90.6% of LendingClub shares are held by institutional investors. Comparatively, 52.2% of Oaktree Specialty Lending shares are held by institutional investors. 4.5% of LendingClub shares are held by company insiders. Comparatively, 0.2% of Oaktree Specialty Lending shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares LendingClub and Oaktree Specialty Lending’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LendingClub $758.61 million 0.42 -$30.75 million $0.02 229.00
Oaktree Specialty Lending $147.70 million 4.23 $126.16 million $0.48 9.23

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

Summary

Oaktree Specialty Lending beats LendingClub on 8 of the 14 factors compared between the two stocks.

About LendingClub

LendingClub Corporation operates an online lending marketplace platform that connects borrowers and investors in the United States. The company's marketplace facilitates various types of loan products for consumers and small businesses, including unsecured personal loans, unsecured education and patient installment loans, auto refinance loans, and small business loans. It also enables investors to invest in a range of loans based on term and credit. The company was founded in 2006 and is headquartered in San Francisco, California.

About Oaktree Specialty Lending

Oaktree Specialty Lending Corporation is a business development company specializing in investments in middle market, bridge financing, first and second lien debt financing, mezzanine debt, senior and junior secured debt, expansions, sponsor-led acquisitions, and management buyouts in small and mid-sized companies. The fund seeks to invest in education services, business services, retail and consumer, healthcare, manufacturing, food and restaurants, construction and engineering, and media and advertising 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 with 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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