Analyzing MCG Capital (MCGC) & Oaktree Strategic Income (OCSI)

MCG Capital (NASDAQ: MCGC) and Oaktree Strategic Income (NASDAQ:OCSI) are both closed end funds companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitability, analyst recommendations and earnings.

Dividends

Oaktree Strategic Income pays an annual dividend of $0.76 per share and has a dividend yield of 8.9%. MCG Capital does not pay a dividend. Oaktree Strategic Income pays out -253.3% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations and price targets for MCG Capital and Oaktree Strategic Income, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MCG Capital 0 0 0 0 N/A
Oaktree Strategic Income 0 2 0 0 2.00

Oaktree Strategic Income has a consensus price target of $9.25, suggesting a potential upside of 8.70%.

Insider and Institutional Ownership

0.7% of Oaktree Strategic Income shares are owned by institutional investors. 0.4% of Oaktree Strategic Income shares are owned 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.

Valuation and Earnings

This table compares MCG Capital and Oaktree Strategic Income’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MCG Capital N/A N/A N/A $0.11 N/A
Oaktree Strategic Income $46.57 million 5.39 -$8.76 million ($0.30) -28.37

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

Profitability

This table compares MCG Capital and Oaktree Strategic Income’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MCG Capital -9.19% -0.34% -0.33%
Oaktree Strategic Income -18.88% 7.20% 3.72%

Summary

Oaktree Strategic Income beats MCG Capital on 7 of the 9 factors compared between the two stocks.

About MCG Capital

PFLT Funding II, LLC, formerly MCG Capital Corporation, is a United States-based company. The Company provides products and services.

About Oaktree Strategic Income

Oaktree Strategic Income Corporation, formerly Fifth Street Senior Floating Rate Corp., is a closed-end, non-diversified management investment company. The Company operates as a specialty finance company. The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments while seeking to preserve its capital. The Company invests in senior secured loans, including first lien, unitranche and second lien debt instruments. The Company may also invest in unsecured loans, including subordinated loans, issued by private middle market companies, and senior and subordinated loans issued by public companies and equity investments. The senior loans that the Company targets have final maturities of 4 to 7 years. The Company seeks to invest in senior loans made primarily to private middle market companies. The Company’s investment advisor is Oaktree Capital Management, L.P.

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