Critical Contrast: Oaktree Specialty Lending (NASDAQ:OCSL) vs. Pagaya Technologies (NASDAQ:PGY)

Pagaya Technologies (NASDAQ:PGY) and Oaktree Specialty Lending (NASDAQ:OCSL) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, risk and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pagaya Technologies	6.25%	44.24%	15.58%
Oaktree Specialty Lending	10.58%	9.75%	4.70%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Pagaya Technologies and Oaktree Specialty Lending, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pagaya Technologies	0	2	9	1	2.92
Oaktree Specialty Lending	0	6	0	0	2.00

Pagaya Technologies presently has a consensus price target of $33.11, suggesting a potential upside of 120.89%. Oaktree Specialty Lending has a consensus price target of $12.17, suggesting a potential downside of 7.27%. Given Pagaya Technologies’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Pagaya Technologies is more favorable than Oaktree Specialty Lending.

Institutional & Insider Ownership

57.1% of Pagaya Technologies shares are held by institutional investors. Comparatively, 36.8% of Oaktree Specialty Lending shares are held by institutional investors. 47.6% of Pagaya Technologies shares are held by insiders. Comparatively, 0.3% of Oaktree Specialty Lending shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Pagaya Technologies and Oaktree Specialty Lending”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pagaya Technologies	$1.30 billion	0.95	$81.39 million	$0.89	16.84
Oaktree Specialty Lending	$316.80 million	3.65	$33.92 million	$0.36	36.44

Pagaya Technologies has higher revenue and earnings than Oaktree Specialty Lending. Pagaya Technologies 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.

Risk & Volatility

Pagaya Technologies has a beta of 5.74, meaning that its share price is 474% more volatile than the S&P 500. Comparatively, Oaktree Specialty Lending has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500.

Summary

Pagaya Technologies beats Oaktree Specialty Lending on 12 of the 15 factors compared between the two stocks.

About Pagaya Technologies

Pagaya Technologies Ltd., a product-focused technology company, deploys data science and proprietary artificial intelligence-powered technology for financial institutions and investors in the United States, Israel, the Cayman Islands, and internationally. The company develops and implements proprietary artificial intelligence technology and related software solutions to assist partners to originate loans and other assets. Its partners include high-growth financial technology companies, incumbent banks and financial institutions, auto finance providers, and residential real estate service providers. Pagaya Technologies Ltd. was incorporated in 2016 and is headquartered in New York, New York.

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.