Analyzing Blackstone Secured Lending Fund (NYSE:BXSL) and Fidus Investment (NASDAQ:FDUS)

Blackstone Secured Lending Fund (NYSE:BXSL) and Fidus Investment (NASDAQ:FDUS) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, risk, profitability, dividends and valuation.

Institutional and Insider Ownership

36.5% of Blackstone Secured Lending Fund shares are held by institutional investors. Comparatively, 28.1% of Fidus Investment shares are held by institutional investors. 0.1% of Blackstone Secured Lending Fund shares are held by insiders. Comparatively, 0.9% of Fidus Investment shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Blackstone Secured Lending Fund and Fidus Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blackstone Secured Lending Fund	$1.42 billion	3.94	$563.46 million	$2.46	9.79
Fidus Investment	$155.87 million	4.35	$82.40 million	$2.34	7.64

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

Profitability

This table compares Blackstone Secured Lending Fund and Fidus Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackstone Secured Lending Fund	39.69%	11.82%	5.23%
Fidus Investment	52.87%	10.71%	5.81%

Dividends

Blackstone Secured Lending Fund pays an annual dividend of $3.08 per share and has a dividend yield of 12.8%. Fidus Investment pays an annual dividend of $1.72 per share and has a dividend yield of 9.6%. Blackstone Secured Lending Fund pays out 125.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fidus Investment pays out 73.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings for Blackstone Secured Lending Fund and Fidus Investment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackstone Secured Lending Fund	1	2	6	0	2.56
Fidus Investment	0	2	1	1	2.75

Blackstone Secured Lending Fund presently has a consensus target price of $28.13, indicating a potential upside of 16.82%. Fidus Investment has a consensus target price of $21.75, indicating a potential upside of 21.71%. Given Fidus Investment’s stronger consensus rating and higher possible upside, analysts clearly believe Fidus Investment is more favorable than Blackstone Secured Lending Fund.

Volatility and Risk

Blackstone Secured Lending Fund has a beta of 0.43, suggesting that its share price is 57% less volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500.

Summary

Fidus Investment beats Blackstone Secured Lending Fund on 9 of the 17 factors compared between the two stocks.

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.

About Fidus Investment

Fidus Investment Corporation is a business development company. It specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.