Sixth Street Specialty Lending (NYSE:TSLX) Shares Gap Down Following Weak Earnings

Key Points

• Shares gapped down after Q1 results missed expectations — EPS $0.42 vs. $0.49 consensus (revenue $93.4M vs. $103.14M), with the stock opening at $18.15 and last trading at $17.85.
• Large dividend increase: the company raised its quarterly dividend to $0.42 (from $0.01), implying a $1.68 annualized payout and a 9.5% yield, with a payout ratio of 101.66% (ex-dividend date June 15).
• Analyst cuts and insider buying: several firms trimmed price targets (average target $21.64, consensus rating "Moderate Buy"), while VP Alan Waxman bought 200,000 shares at $18.18, raising his stake to 500,000 shares.

Sixth Street Specialty Lending, Inc. (NYSE:TSLX - Get Free Report)'s stock price gapped down before the market opened on Wednesday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $19.60, but opened at $18.15. Sixth Street Specialty Lending shares last traded at $17.85, with a volume of 544,354 shares traded.

The financial services provider reported $0.42 EPS for the quarter, missing analysts' consensus estimates of $0.49 by ($0.07). The business had revenue of $93.40 million for the quarter, compared to the consensus estimate of $103.14 million. Sixth Street Specialty Lending had a return on equity of 12.71% and a net margin of 37.99%.During the same quarter last year, the company earned $0.58 earnings per share.

Sixth Street Specialty Lending Increases Dividend

The firm also recently declared a quarterly dividend, which will be paid on Tuesday, June 30th. Investors of record on Monday, June 15th will be given a dividend of $0.42 per share. This is a boost from Sixth Street Specialty Lending's previous quarterly dividend of $0.01. The ex-dividend date is Monday, June 15th. This represents a $1.68 dividend on an annualized basis and a yield of 9.5%. Sixth Street Specialty Lending's dividend payout ratio is currently 101.66%.

Wall Street Analyst Weigh In

A number of research firms recently commented on TSLX. Keefe, Bruyette & Woods decreased their price target on Sixth Street Specialty Lending from $23.00 to $22.00 and set an "outperform" rating on the stock in a research report on Tuesday, February 17th. JPMorgan Chase & Co. decreased their price target on Sixth Street Specialty Lending from $21.00 to $18.50 and set a "neutral" rating on the stock in a research report on Friday, March 13th. Royal Bank Of Canada decreased their price target on Sixth Street Specialty Lending from $24.00 to $22.00 and set an "outperform" rating on the stock in a research report on Friday, February 20th. Citizens Jmp decreased their price target on Sixth Street Specialty Lending from $25.00 to $24.00 and set a "market outperform" rating on the stock in a research report on Wednesday, April 22nd. Finally, Wells Fargo & Company reduced their price objective on Sixth Street Specialty Lending from $22.00 to $20.00 and set an "overweight" rating on the stock in a report on Tuesday, February 17th. One analyst has rated the stock with a Strong Buy rating, five have given a Buy rating and two have given a Hold rating to the stock. According to MarketBeat.com, the stock presently has an average rating of "Moderate Buy" and an average price target of $21.64.

Insider Transactions at Sixth Street Specialty Lending

In other news, VP Alan Waxman acquired 200,000 shares of Sixth Street Specialty Lending stock in a transaction on Monday, March 9th. The shares were purchased at an average price of $18.18 per share, with a total value of $3,636,000.00. Following the acquisition, the vice president owned 500,000 shares in the company, valued at $9,090,000. This represents a 66.67% increase in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available at this link. Over the last 90 days, insiders acquired 545,000 shares of company stock worth $9,997,150. 3.83% of the stock is currently owned by corporate insiders.

Institutional Inflows and Outflows

Large investors have recently made changes to their positions in the stock. Harbor Investment Advisory LLC lifted its stake in shares of Sixth Street Specialty Lending by 673.2% in the 4th quarter. Harbor Investment Advisory LLC now owns 1,732 shares of the financial services provider's stock valued at $38,000 after purchasing an additional 1,508 shares during the period. Fifth Third Bancorp acquired a new position in shares of Sixth Street Specialty Lending in the 1st quarter valued at $63,000. Advisory Services Network LLC acquired a new position in shares of Sixth Street Specialty Lending in the 3rd quarter valued at $75,000. Redmont Wealth Advisors LLC acquired a new position in shares of Sixth Street Specialty Lending in the 3rd quarter valued at $79,000. Finally, State of Alaska Department of Revenue acquired a new position in shares of Sixth Street Specialty Lending in the 3rd quarter valued at $98,000. Institutional investors and hedge funds own 70.25% of the company's stock.

Sixth Street Specialty Lending Stock Performance

The stock has a 50 day moving average price of $18.35 and a two-hundred day moving average price of $20.41. The company has a current ratio of 2.83, a quick ratio of 2.83 and a debt-to-equity ratio of 1.08. The company has a market cap of $1.68 billion, a price-to-earnings ratio of 9.79 and a beta of 0.65.

Sixth Street Specialty Lending Company Profile

Sixth Street Specialty Lending Inc NYSE: TSLX is a closed-end, externally managed business development company that provides flexible debt financing solutions to middle-market companies. The fund primarily targets senior secured loans, unitranche facilities, mezzanine debt, second-lien financings and equity co-investment opportunities. By structuring tailored capital solutions, Sixth Street Specialty Lending seeks to support growth initiatives, recapitalizations and refinancings across a diverse set of industries, including technology, healthcare and business services.

As an affiliate of Sixth Street Partners, a global alternative investment firm, the company leverages the broader platform’s credit research, operational expertise and industry relationships.

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