Financial Analysis: Blue Owl Capital Co. III (NYSE:OBDE) and Bain Capital Specialty Finance (NYSE:BCSF)

Blue Owl Capital Co. III (NYSE:OBDE) and Bain Capital Specialty Finance (NYSE:BCSF) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings.

Earnings & Valuation

This table compares Blue Owl Capital Co. III and Bain Capital Specialty Finance”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blue Owl Capital Co. III	$244.17 million	7.14	$271.96 million	$1.76	8.03
Bain Capital Specialty Finance	$297.79 million	4.01	$123.38 million	$1.99	9.28

Blue Owl Capital Co. III has higher earnings, but lower revenue than Bain Capital Specialty Finance. Blue Owl Capital Co. III is trading at a lower price-to-earnings ratio than Bain Capital Specialty Finance, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for Blue Owl Capital Co. III and Bain Capital Specialty Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blue Owl Capital Co. III	0	0	1	0	3.00
Bain Capital Specialty Finance	0	1	1	0	2.50

Blue Owl Capital Co. III currently has a consensus price target of $16.00, indicating a potential upside of 13.15%. Bain Capital Specialty Finance has a consensus price target of $17.50, indicating a potential downside of 5.28%. Given Blue Owl Capital Co. III’s stronger consensus rating and higher possible upside, analysts plainly believe Blue Owl Capital Co. III is more favorable than Bain Capital Specialty Finance.

Profitability

This table compares Blue Owl Capital Co. III and Bain Capital Specialty Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blue Owl Capital Co. III	45.35%	11.52%	5.22%
Bain Capital Specialty Finance	43.62%	11.90%	5.43%

Dividends

Blue Owl Capital Co. III pays an annual dividend of $1.40 per share and has a dividend yield of 9.9%. Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 9.1%. Blue Owl Capital Co. III pays out 79.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance pays out 84.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blue Owl Capital Co. III is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Blue Owl Capital Co. III beats Bain Capital Specialty Finance on 7 of the 12 factors compared between the two stocks.

About Blue Owl Capital Co. III

Blue Owl Capital Corporation is a specialty finance company focused on lending to U.S. middle-market companies. Blue Owl Capital Corporation is based in NEW YORK.

About Bain Capital Specialty Finance

Bain Capital Specialty Finance, Inc. is business development company specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.