Comparing Blackstone Secured Lending Fund (NYSE:BXSL) and Sixth Street Specialty Lending (NYSE:TSLX)

Sixth Street Specialty Lending (NYSE:TSLX) and Blackstone Secured Lending Fund (NYSE:BXSL) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Institutional and Insider Ownership

70.3% of Sixth Street Specialty Lending shares are owned by institutional investors. Comparatively, 36.5% of Blackstone Secured Lending Fund shares are owned by institutional investors. 3.2% of Sixth Street Specialty Lending shares are owned by company insiders. Comparatively, 0.1% of Blackstone Secured Lending Fund shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sixth Street Specialty Lending and Blackstone Secured Lending Fund, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sixth Street Specialty Lending	0	2	7	1	2.90
Blackstone Secured Lending Fund	0	3	5	0	2.63

Sixth Street Specialty Lending currently has a consensus target price of $23.63, indicating a potential upside of 11.04%. Blackstone Secured Lending Fund has a consensus target price of $29.43, indicating a potential upside of 10.32%. Given Sixth Street Specialty Lending’s stronger consensus rating and higher possible upside, equities analysts plainly believe Sixth Street Specialty Lending is more favorable than Blackstone Secured Lending Fund.

Profitability

This table compares Sixth Street Specialty Lending and Blackstone Secured Lending Fund’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sixth Street Specialty Lending	39.56%	13.47%	6.17%
Blackstone Secured Lending Fund	42.38%	11.85%	5.32%

Dividends

Sixth Street Specialty Lending pays an annual dividend of $1.84 per share and has a dividend yield of 8.6%. Blackstone Secured Lending Fund pays an annual dividend of $3.08 per share and has a dividend yield of 11.5%. Sixth Street Specialty Lending pays out 90.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blackstone Secured Lending Fund pays out 115.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings & Valuation

This table compares Sixth Street Specialty Lending and Blackstone Secured Lending Fund”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sixth Street Specialty Lending	$240.98 million	8.34	$220.02 million	$2.04	10.43
Blackstone Secured Lending Fund	$646.53 million	9.54	$694.10 million	$2.66	10.03

Blackstone Secured Lending Fund has higher revenue and earnings than Sixth Street Specialty Lending. Blackstone Secured Lending Fund is trading at a lower price-to-earnings ratio than Sixth Street Specialty Lending, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Sixth Street Specialty Lending has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500. Comparatively, Blackstone Secured Lending Fund has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500.

Summary

Sixth Street Specialty Lending beats Blackstone Secured Lending Fund on 11 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 Blackstone Secured Lending Fund

Blackstone Secured Lending Fund is business development company and a Delaware statutory trust formed on March 26, 2018, and structured as an externally managed, non-diversified closed-end investment Fund. On October 26, 2018, the fund elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). In addition, the Fund elected to be treated for U.S. federal income tax purposes, as a regulated investment company (RIC), as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). The fund also intends to continue to comply with the requirements prescribed by the Code in order to maintain tax treatment as a RIC. The fund's investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. The Fund seeks to achieve its investment objective primarily through originated loans, equity and other securities, including syndicated loans, of private U.S. companies, specifically small and middle market companies, typically in the form of first lien senior secured and unitranche loans (including first out/last out loans), and to a lesser extent, second lien, third lien, unsecured and subordinated loans and other debt and equity securities.