Sixth Street Specialty Lending (TSLX)
NYSE:TSLX
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Sixth Street Specialty Lending
(NYSE:TSLX)
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Rating:59Neutral
Price Target:
$21.00
â–²(16.28% Upside)
Action:ReiteratedDate:02/14/26
The score is anchored by mixed financial quality (strong annual profitability and generally healthy cash generation, but notable inconsistencies in the latest TTM data) and weak technical momentum (below key moving averages with negative MACD). These are partially offset by attractive valuation (low P/E and high yield) and a constructive earnings-call outlook with solid liquidity, conservative leverage, and covered dividends despite some NAV and yield/spread headwinds.
Positive Factors
Liquidity and conservative leverage
Substantial liquidity (≈33% of assets and multi‑times coverage of unfunded commitments) and target leverage near 1.1x provide durable funding flexibility. This supports selective originations, cushions against drawdowns, and preserves capacity to capitalize on dislocations over the next several quarters.
Negative Factors
Modest NAV pressure and unrealized losses
Small but persistent NAV declines and periodic unrealized valuation reversals signal sensitivity to mark‑to‑market moves and idiosyncratic credit events. For a dividend‑focused BDC, NAV erosion can constrain total return and limit optional capital actions if losses recur or cluster over multiple quarters.
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Positive Factors
Negative Factors
Liquidity and conservative leverage
Substantial liquidity (≈33% of assets and multi‑times coverage of unfunded commitments) and target leverage near 1.1x provide durable funding flexibility. This supports selective originations, cushions against drawdowns, and preserves capacity to capitalize on dislocations over the next several quarters.
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Sixth Street Specialty Lending (TSLX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.72B
Dividend Yield9.64%
Average Volume (3M)1.09M
Price to Earnings (P/E)12.1
Beta (1Y)0.57
Revenue Growth-6.44%
EPS Growth-1.18%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.52
Shares Outstanding95,019,600
10 Day Avg. Volume562,910
30 Day Avg. Volume1,085,978
Financial Highlights & Ratios
PEG Ratio-1.11
Price to Book (P/B)1.28
Price to Sales (P/S)5.71
P/FCF Ratio11.41
Enterprise Value/Market Cap2.00
Enterprise Value/Revenue9.53
Enterprise Value/Gross Profit13.09
Enterprise Value/Ebitda14.88
Forecast
1Y Price Target
$21.19Price Target Upside17.33% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)1.97
Revenue Forecast (FY)$409.51M
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 s...
How the Company Makes Money
Sixth Street Specialty Lending generates revenue primarily through interest income from its loan portfolio, which includes both first-lien and second-lien loans. The company earns interest on the loans it extends to middle-market companies, which ...
Sixth Street Specialty Lending Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call emphasized durable operating results and strong balance-sheet liquidity, with full-year operating ROE (12.7%) and economic returns (10.9%) exceeding the company’s estimated cost of equity. High repayment activity, elevated fee income, conservative leverage (1.1x) and substantial liquidity (~33% of assets and multi‑times coverage of unfunded commitments) were highlighted as strategic strengths that position the firm to capitalize on market dislocations. Near-term headwinds include modest NAV declines, Q4 unrealized losses and yield compression due to lower base rates, alongside a tighter spread environment and competitive pressure in new issuance. Management expects 2026 normalized earnings to be slightly below peak but durable, and a new fee-free JV that is expected to be accretive over time. Overall, the positives around returns, liquidity, and accretive initiatives outweigh the manageable near-term challenges.Positive Updates
Strong full-year adjusted operating returns
Full-year 2025 adjusted net investment income per share of $2.18, representing an operating return on equity of 12.7% (exceeding the top end of guidance) and adjusted net income per share of $1.76 (ROE 10.3%). Economic return for 2025 was 10.9%, marking the tenth consecutive year of double-digit economic returns. Both operating ROE and economic return exceeded the company's estimated cost of equity of 9%.
Negative Updates
Modest decline in net asset value
Reported NAV per share of $16.98 at year end, down from $17.11 in Q3 and $17.09 at year end 2024 (approximately a 0.6%–0.8% decline), driven by reversal of unrealized gains, portfolio-specific events and some spread widening.
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Q4-2025 Updates
Positive
Negative
Strong full-year adjusted operating returns
Full-year 2025 adjusted net investment income per share of $2.18, representing an operating return on equity of 12.7% (exceeding the top end of guidance) and adjusted net income per share of $1.76 (ROE 10.3%). Economic return for 2025 was 10.9%, marking the tenth consecutive year of double-digit economic returns. Both operating ROE and economic return exceeded the company's estimated cost of equity of 9%.
Read all positive updates
Company Guidance
SLX guided 2026 adjusted net investment income (NII) ROE of 11.0%–11.5%, which using year‑end book value per share of $16.97 implies adjusted NII of $1.87–$1.95 per share, based on the forward rate curve, spreads on new investments broadly stable, and leverage in the middle of its target range; the lower end assumes normalized activity‑based fees and the upper end assumes activity fees above the three‑year average. Management noted $1.21 of spillover income per share at year‑end, a $200 million SLX commitment to the new SCP JV (expected to generate mid‑teens returns and be accretive), and reiterated a base quarterly dividend of $0.46 (Q4 adjusted NII was $0.52, providing 113% base coverage) with a $0.01 supplemental dividend declared; balance sheet targets cited include year‑end leverage of 1.1x debt/equity, $246 million of investment capacity before the top end of target leverage, approximately $1.1 billion of unfunded revolver capacity against $199 million of unfunded commitments (liquidity ~33% of assets), nearly six times contractual coverage on unfunded commitments available to be drawn, and liquidity that exceeds unfunded commitments by ~4.2x after adjusting for the 2026 note repayment.Sixth Street Specialty Lending Financial Statement Overview
Summary
Income Statement
52
Neutral
Balance Sheet
58
Neutral
Cash Flow
55
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 360.21M | 359.74M | 369.80M | 187.16M | 266.27M |
| Gross Profit | 262.39M | 252.97M | 273.41M | 136.49M | 225.86M |
| EBITDA | 230.75M | 193.12M | 223.83M | 111.24M | 214.07M |
| Net Income | 170.52M | 186.57M | 222.02M | 108.05M | 211.78M |
Balance Sheet | |||||
| Total Assets | 3.42B | 3.58B | 3.34B | 2.84B | 2.55B |
| Cash, Cash Equivalents and Short-Term Investments | 19.66M | 4.97M | 1.22M | 10.21M | 1.57M |
| Total Debt | 1.74B | 1.90B | 1.78B | 1.44B | 1.19B |
| Total Liabilities | 1.81B | 1.97B | 1.85B | 1.50B | 1.28B |
| Stockholders Equity | 1.61B | 1.61B | 1.50B | 1.34B | 1.28B |
Cash Flow | |||||
| Free Cash Flow | 180.28M | 187.25M | 191.97M | 71.83M | 112.62M |
| Operating Cash Flow | 180.28M | 187.25M | 191.97M | 71.83M | 112.62M |
| Investing Cash Flow | 221.29M | -232.74M | -428.76M | -296.37M | -110.17M |
| Financing Cash Flow | -409.24M | 47.62M | 236.34M | 234.21M | 241.00K |
Sixth Street Specialty Lending Technical Analysis
Negative
18.06
Price Trends
18.42
Negative
19.74
Negative
20.86
Negative
Market Momentum
-0.07
Negative
49.04
Neutral
38.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSLX, the sentiment is Negative. The current price of 18.06 is above the 20-day moving average (MA) of 17.98, below the 50-day MA of 18.42, and below the 200-day MA of 20.86, indicating a neutral trend. The MACD of -0.07 indicates Negative momentum. The RSI at 49.04 is Neutral, neither overbought nor oversold. The STOCH value of 38.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSLX.
Sixth Street Specialty Lending Risk Analysis
Sixth Street Specialty Lending disclosed 1 risk factors in its most recent earnings report. Sixth Street Specialty Lending reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sixth Street Specialty Lending Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $1.37B | 9.68 | 11.18% | 11.90% | 25.28% | -1.69% | |
69 Neutral | $2.21B | 12.09 | 7024.00% | 0.08% | 21.53% | 42.18% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $1.26B | 7.49 | 14.09% | 13.53% | 33.44% | 25.22% | |
66 Neutral | $1.01B | 8.99 | 8.03% | 17.34% | -16.58% | 65.24% | |
61 Neutral | $805.44M | 59.29 | 1.29% | 14.17% | 36.15% | -38.59% | |
59 Neutral | $1.72B | 12.06 | 10.58% | 9.64% | -6.44% | -1.18% |
* Financial Sector Average
TSLX
Sixth Street Specialty Lending
18.06
-0.13
-0.69%
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Capital Southwest
22.83
5.73
33.54%
NMFC
New Mountain Finance
7.99
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-1.65%
GSBD
Goldman Sachs BDC
8.97
0.38
4.45%
AAMI
Acadian Asset Management
61.93
35.35
133.02%
TRIN
Trinity Capital
15.12
2.78
22.49%
Sixth Street Specialty Lending Corporate Events
Business Operations and StrategyDividendsFinancial Disclosures
Sixth Street Specialty Lending Reports Strong 2025 Results
Positive
Feb 12, 2026
On February 12, 2026, Sixth Street Specialty Lending reported full-year 2025 net investment income of $2.23 per share and net income of $1.81 per share, with fourth-quarter figures of $0.53 and $0.32 per share, respectively, supported by higher ra...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.