Is Oaktree Specialty Lending Corp. overvalued or undervalued?

As of 19 November 2020, the valuation grade for Oaktree Specialty Lending Corp. moved from risky to very attractive. The company appears undervalued, particularly when considering its P/E ratio of 140, which is significantly higher than peers like Victory Capital Holdings, Inc. at 15.76 and Federated Hermes, Inc. at 13.69. Additionally, Oaktree's price to book value stands at 0.86, indicating it is trading below its book value, while its EV to EBITDA ratio of 8.71 suggests a favorable valuation compared to the industry.
In terms of peer comparison, Oaktree Specialty Lending Corp. has a much lower valuation than TPG, Inc., which is classified as expensive with a P/E of 1024.14, and StepStone Group, Inc., which is rated risky with a P/E of -31.55. Despite its attractive valuation, Oaktree has struggled in recent performance, with a year-to-date return of -12.17%, significantly lagging behind the S&P 500's return of 12.22%. This underperformance highlights the potential for recovery as the company's valuation metrics indicate it may be undervalued relative to its peers.