Contrasting Sixth Street Specialty Lending (NYSE:TSLX) and Value Line (NASDAQ:VALU)

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

Insider and Institutional Ownership

6.3% of Value Line shares are owned by institutional investors. Comparatively, 70.3% of Sixth Street Specialty Lending shares are owned by institutional investors. 0.0% of Value Line shares are owned by insiders. Comparatively, 3.8% of Sixth Street Specialty Lending shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Value Line has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, Sixth Street Specialty Lending has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.

Profitability

This table compares Value Line and Sixth Street Specialty Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Value Line	60.27%	18.43%	13.14%
Sixth Street Specialty Lending	21.79%	11.33%	5.16%

Valuation and Earnings

This table compares Value Line and Sixth Street Specialty Lending”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Value Line	$32.89 million	12.16	$21.63 million	$2.11	20.20
Sixth Street Specialty Lending	$132.14 million	12.18	$209.99 million	$0.95	17.83

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.

Analyst Ratings

This is a breakdown of current ratings and price targets for Value Line and Sixth Street Specialty Lending, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Value Line	0	1	0	0	2.00
Sixth Street Specialty Lending	0	3	5	0	2.62

Sixth Street Specialty Lending 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 probable upside, analysts plainly believe Sixth Street Specialty Lending is more favorable than Value Line.

Dividends

Value Line pays an annual dividend of $1.40 per share and has a dividend yield of 3.3%. Sixth Street Specialty Lending pays an annual dividend of $1.68 per share and has a dividend yield of 9.9%. Value Line pays out 66.4% of its earnings in the form of a dividend. 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 has increased its dividend for 11 consecutive years.

Summary

Sixth Street Specialty Lending beats Value Line on 9 of the 17 factors compared between the two stocks.

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.

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.