Sixth Street Specialty Lending (TSLX) AI Stock Analysis

• Market Cap: $2.00B
• Dividend Yield: 8.65%
• Average Volume (3M): 567.20K
• Price to Earnings (P/E): 11.3
• Beta (1Y): 0.50
• Revenue Growth: 5.00%
• EPS Growth: -24.20%
• Country: US
• Employees: N/A
• Sector: Financial
• Sector Strength: 87
• Industry: Asset Management
• EPS (TTM): 0.58
• Shares Outstanding: 93,964,355
• 10 Day Avg. Volume: 424,483
• 30 Day Avg. Volume: 567,200
• PEG Ratio: >-0.01
• Price to Book (P/B): <0.01
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.01
• Enterprise Value/Market Cap: -22.65
• Enterprise Value/Revenue: -24.72
• Enterprise Value/Gross Profit: -126.91
• Enterprise Value/Ebitda: -0.13
• 1Y Price Target: $23.07
• Price Target Upside: 5.78% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

Sixth Street Specialty Lending receives a robust overall score of 74, underpinned by strong financial performance, attractive valuation, and positive corporate developments. While cash flow management and mixed technical indicators pose challenges, the company's solid fundamentals and high dividend yield enhance its investment appeal.

Positive Factors

Financial Performance

Activity-related fee income remained elevated, which supports strong financial performance.

Financial Strategy

The new bond issuance was well-timed, offering best-in-class pricing, which is beneficial for the company's financial strategy.

Investment Outcomes

TSLX is likely to recognize a gain from its Aug. 7, 2024 investment in Arrowhead Pharmaceuticals, as the company announced a licensing and collaboration agreement that will likely result in a positive outcome.

Negative Factors

NOI Conversion

NOI conversion overall has lagged, averaging 76% for the past four quarters.

Non-Accrual Investments

Non-accruals were moderately higher, totaling 3.8% of the portfolio, compared to 2.1% last quarter.

Unrealized Losses

Adjusted EPS totaled $0.41, which was negatively impacted by some unrealized losses primarily tied to one investment moving to non-accrual status.

Sixth Street Specialty Lending Business Overview & Revenue Model

Company Description

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.

How the Company Makes Money

Sixth Street Specialty Lending makes money primarily through the interest and fees collected on its portfolio of debt investments, including senior secured loans and mezzanine debt. These investments generate income in the form of interest payments from the borrowing companies. Additionally, TSLX may earn income through origination and structuring fees charged at the initiation of a new loan. The company also seeks to enhance its returns through equity investments, which can provide capital appreciation and potential dividend income. TSLX's earnings are further supported by its strategic partnerships and its affiliation with Sixth Street Partners, a global investment firm, which provides access to extensive industry insights and deal-sourcing capabilities. The company's revenue model is driven by its ability to effectively manage credit risk, maintain a diversified investment portfolio, and optimize its capital structure to support consistent income generation.

Sixth Street Specialty Lending Financial Statement Overview

Summary

Sixth Street Specialty Lending shows strong profitability and revenue growth with a solid balance sheet and low leverage, but faces challenges in cash flow management, as indicated by negative free cash flows and operating cash flow issues.

Income Statement

The company has shown strong revenue growth over the years, with a substantial increase in total revenue from 2022 to 2023. The gross profit margin is consistent, indicating efficient cost management. Net profit margin and EBIT margin are robust, reflecting healthy profitability. However, the absence of EBITDA data limits the analysis of operational efficiency beyond EBIT.

Balance Sheet

The balance sheet reveals a stable equity position with a high equity ratio, enhancing financial stability. The debt-to-equity ratio is low, indicating low leverage and reduced financial risk. Return on equity is impressive, showcasing effective utilization of shareholders' funds. The primary concern is the high level of total liabilities, which could pose a risk if not managed effectively.

Cash Flow

The cash flow statement shows challenges in generating positive free cash flow, with negative figures in recent years indicating potential liquidity issues. The operating cash flow to net income ratio is not calculable due to negative operating cash flows, highlighting operational cash management concerns. The company must focus on improving cash flow from operations to support long-term growth.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
458.38M	455.10M	438.09M	136.49M	223.96M	198.35M
	Gross Profit
356.71M	252.97M	328.92M	72.48M	140.50M	133.34M
	EBIT
337.74M	193.12M	332.50M	168.95M	212.16M	183.87M
	EBITDA
145.43M	297.88M	0.00	26.44M	137.06M	0.00
	Net Income Common Stockholders
198.38M	186.57M	222.02M	108.05M	211.78M	178.11M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
47.27M	27.33M	25.20M	2.74B	1.57M	2.46M
	Total Assets
3.50B	3.58B	3.34B	2.84B	2.55B	2.34B
	Total Debt
0.00	0.00	1.78B	1.44B	1.19B	1.11B
	Net Debt
-47.27M	-27.33M	-1.22M	1.43B	1.18B	1.11B
	Total Liabilities
1.90B	1.97B	1.85B	1.50B	1.28B	1.18B
	Stockholders Equity
1.60B	1.61B	1.50B	1.34B	1.28B	1.16B
Cash Flow		Free Cash Flow
99.24M	-45.49M	-236.79M	-224.53M	2.45M	145.07M
	Operating Cash Flow
306.75M	-45.49M	-236.79M	-224.53M	2.45M	145.07M
	Investing Cash Flow
-227.51M	0.00	0.00	-995.62M	-1.20T	-1.04T
	Financing Cash Flow
-208.81M	47.62M	236.34M	234.21M	241.00K	-145.94M

Sixth Street Specialty Lending Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 21.81
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSLX, the sentiment is Positive. The current price of 21.81 is above the 20-day moving average (MA) of 20.71, above the 50-day MA of 21.31, and above the 200-day MA of 20.48, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 62.65 is Neutral, neither overbought nor oversold. The STOCH value of 73.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSLX.

Sixth Street Specialty Lending Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TSLX	74 Outperform	$2.00B	11.27	11.06%	8.65%	5.00%	-24.20%
GSBD	71 Outperform	$1.27B	25.03	3.27%	15.43%	-28.04%	-69.52%
HTGC	70 Outperform	$3.07B	13.13	11.30%	9.15%	-7.29%	-38.60%
CSWC	68 Neutral	$1.01B	14.43	8.57%	11.54%	4.85%	-37.38%
BCSF	66 Neutral	$996.38M	8.79	9.87%	11.10%	12.24%	-3.21%
NMFC	65 Neutral	$1.15B	10.79	8.11%	12.29%	-3.55%	-20.43%
Sector *	64 Neutral	$12.73B	9.82	7.91%	17015.08%	12.18%	-5.69%

Sixth Street Specialty Lending Corporate Events

Sixth Street Reports Strong Q1 2025 Financial Results

On April 30, 2025, Sixth Street Specialty Lending, Inc. announced its first quarter 2025 financial results, reporting a net investment income of $0.62 per share and a net income of $0.39 per share, with an annualized return on equity of 14.4% and 9.2%, respectively. The company declared a second quarter base dividend of $0.46 per share and a first quarter supplemental dividend of $0.06 per share. Additionally, the company issued $300 million in unsecured notes and amended its Revolving Credit Facility, extending its maturity and reducing costs. The company’s portfolio saw a decrease in new investment commitments compared to the previous quarter, with a focus on first-lien debt investments.

Spark’s Take on TSLX Stock

According to Spark, TipRanks’ AI Analyst, TSLX is a Outperform.

Sixth Street Specialty Lending’s strong financial performance, attractive valuation, and positive earnings call contribute to its robust overall score. However, challenges in cash flow management and mixed technical indicators slightly temper the outlook. The company’s reasonable P/E ratio and high dividend yield offer additional support for its stock appeal, while positive corporate events further bolster confidence in future performance.

To see Spark’s full report on TSLX stock, click here.

Sixth Street Specialty Lending Reports 2024 Financial Results

On February 13, 2025, Sixth Street Specialty Lending announced its financial results for the full year and fourth quarter of 2024, along with the declaration of a first quarter 2025 base dividend of $0.46 per share and a fourth quarter 2024 supplemental dividend of $0.07 per share. The company reported an increase in net investment income and net income for the year and quarter, reflecting a higher interest rate environment and increased fee income. The company’s portfolio showed growth with new investment commitments and a stable NAV per share, enhancing its financial position and investor returns.