Sixth Street Specialty Lending, Inc. (TSLX) Stock Analysis
Sixth Street Specialty Lending, Inc.
▾ What's in the 40/100 risk score? (higher = riskier)
Contributions (weight × component score) sum to the total. This near-term score now includes fundamental health (leverage, FCF trend, DCF applicability). See the Financial Health section for the full balance-sheet read.
How to read TSLX
A profitable, cash-generating business — our discounted-cash-flow estimate is the primary lens, cross-checked against what growth the price implies and against peers.
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1
The verdict + intrinsic value (our DCF) ↓
Our estimate of what a share is worth, versus today's price.
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2
Reverse-DCF + the interactive calculator ↓
See the growth the price assumes, then flex every assumption yourself to pressure-test it.
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3
Football field + peers ↓
A cross-check across methods and against comparable companies.
Is now a good time to buy TSLX?
Macro: Neutral / mid-cycle
TSLX trades at $18.77 vs an estimated
intrinsic value
of $26.34
— a 28.7% discount to model IV.
Today's price is consistent with TSLX's owner-earnings free cash flow per share declining about 13.9% per year over the next 5 years (the
price-implied growth rate).
Our DCF projects
modeled growth
of -5.0% per year based on history + sector defaults
(analyst consensus estimates not yet integrated).
Note: this is a 5-year, per-share view. The Reverse-DCF section below asks the same question on a stricter 10-year free-cash-flowFree Cash Flow (FCF) — Operating cash flow minus capital spending: cash left after a company covers operating costs, taxes and interest and reinvests in the business — but BEFORE repaying debt principal or paying dividends. The cash actually available to investors.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation → basis — so its growth number is different, not contradictory.
▾ Exactly how this 5-year figure is computed
Current price: $18.77 (live)
Discount rate: 11.5%; terminal growth: 0.0%
Forecast: 5 years explicit growth, then a linear fade to terminal; end-of-period cash flows discounted to today
Growth path: the model's probability-weighted scenarios (conservative 40% / base 35% / optimistic 25%) — see the "Three Scenarios, Weighted" table below for the three IVs
Method: solve for the constant 5-year per-share growth rate that, run through this same structure, makes the intrinsic value equal today's price. (The 10-year figure below uses a flat 10-yr path instead — hence a different number.)
Not investment advice. The model can be wrong. Verify the assumptions in the sections below and consider consulting a licensed advisor for significant decisions.
What growth must the market believe? Reverse DCF — Instead of asking "what is this stock worth?", asks "what growth rate is the current market price already assuming?"
Why it matters: It crystallizes the bull thesis as a single number you can argue with. If the market expects 40% growth for 10 years and you do not believe that, the stock is overvalued.
Reference: 10–15% = sustainable for strong companies · 20–25% = exceptional · 30%+ = historically very rare
Traditional DCF asks "what is this stock worth?" Reverse DCF flips it: it treats today's price as correct and solves for the growth rate that justifies it. In plain terms — if our model is right about everything else, the company's cash flow would have to grow (or shrink) by this much every year for the next 10 years for today's price to make sense. If that required growth looks unrealistic, the price is stretched; if it looks easy to beat, the price may be cheap.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation → must grow at:
▾ Exactly how this 10-year figure is computed
Forecast length: 10 years, single flat growth rate (no fade)
Terminal growth after year 10: 2.5%
Discount rate: 11.5% (the rate the model used)
Price used: $18.77 — the live price shown on this page (not frozen)
Method: solve for the constant annual growth rate that makes the discounted 10-year FCF stream + terminal value equal today's price.
Market is pricing in shrinking cash flow — often a sign of undervaluation OR a dying business. Check leverage, the cash-flow trend and the measurable financial-health screens below to tell them apart.
For reference: The market is pricing in a material multi-year contraction in cash flow (≈12.2%/yr) — a significant decline, not a flat business.
▾ How we computed this · Reality check thresholds · Assumptions
- Starting FCF/share: $4.27 (TTM)
- Discount RateDiscount Rate — The annual return you demand for taking single-stock risk instead of buying a safe Treasury or index fund.
Why it matters: Higher discount rate = stricter valuation (a stock has to produce more cash to be worth holding). Lower = more generous.
Reference: 8–12% is standard · 9–10% matches S&P 500 historical return · Below 7% is illogical for single-stock risk
Full explanation →: 11.5% — standard 8-12%; 9-10% matches S&P 500 historical return - Terminal Growth RateTerminal Growth Rate — The growth rate we assume the company holds forever, after the explicit 10-year forecast period ends.
Why it matters: It anchors the long-tail value. Cannot mathematically exceed long-term GDP growth or the company eventually becomes larger than the global economy.
Reference: 2–3% (matches long-term US GDP growth) · Above 4% is mathematically problematic
Full explanation →: 2.5% — matches long-term GDP growth - Forecast horizon: 10 years explicit + terminal perpetuity
| ≤ 0% | Priced for decline — likely undervalued OR dying business |
| 5-12% | Reasonable; sustainable for quality businesses |
| 12-18% | Demanding — strong execution required |
| 18-25% | Exceptional — few companies sustain for a decade |
| 25-35% | Heroic — historically very rare |
| 35%+ | Borderline impossible at scale |
Sustaining 30%+ cash-flow growth for a full decade at scale is exceedingly rare — the bar is brutally high.
Use the interactive calculator below to change the discount rate, growth and terminal-growth assumptions and watch the value move.
Football field: where does the price sit?
Different valuation methods produce different fair-value ranges depending on assumptions. Plotting them together lets you see at a glance whether the current price is reasonable across approaches, or only one specific lens.
Industry multiples sourced from: broad market average (sector unknown). See the Peer Basket section below for the peer comparison and its limited-comparables caveat.
How does TSLX stack up against its closest peers?
We take the 8 same-industry companies most similar to TSLX (similar size) and check what investors are paying for each dollar of their revenue (or profits). If TSLX is much more expensive on the same yardstick, that's a red flag — unless you have a specific reason it deserves a premium. For a leveraged business, FCF yield (in the table) is usually more reliable than EV/Sales, because revenue multiples ignore differences in margins and debt.
▾ What's "EV / Sales" in plain English?
EV (Enterprise Value) = market cap + total debt − cash. It's "what you'd pay to buy the entire company outright" — you pay the market cap to shareholders and take over their debt, but you keep their cash. EV is fairer than market cap alone because it includes the debt the new owner inherits.
EV / Sales = EV ÷ annual revenue. So "2.5×" means investors pay $2.50 of enterprise value per $1 of yearly sales. Higher = market is paying more per dollar of sales (usually because they expect future growth or fat margins).
p25 / median / p75 are the 25th, 50th (middle), and 75th percentile of the peers' multiples. Half the peers fall between p25 and p75. The median (p50) is the typical peer — that's the benchmark we compare to.
Bold middle number = median peer. Half the peers trade above it, half below. Computed over 8 same-industry peers; implausible multiples excluded.
⚠️ Important caveat: peer multiples only work if the peers are genuinely comparable. Always check the peer list below — if the auto-picker grabbed micro-caps or unrelated businesses, the comparison is noise. A medical-device giant priced against tiny biotech startups won't produce a useful signal.
▾ View peer list (8)
| Ticker | Company | Industry | Mcap | EV/Sales | EV/GP | EV/EBIT | FCF Yield |
|---|---|---|---|---|---|---|---|
| TRIN | Trinity Capital Inc. | Unknown | $1.5B | — | — | — | — |
| TRINI | Trinity Capital Inc. | Unknown | $2.3B | — | — | — | — |
| TRINZ | Trinity Capital Inc. | Unknown | $2.3B | — | — | — | — |
| RWAYL | Runway Growth Finance Corp. | Unknown | $1.1B | — | — | — | 13.3% |
| RWAYI | Runway Growth Finance Corp. | Unknown | $1.0B | — | — | — | 13.6% |
| SCA | Stellus Capital Investment Corp | Unknown | $764M | — | — | — | — |
| SLRC | SLR Investment Corp. | Unknown | $714M | — | — | — | — |
| SSSSL | SURO CAPITAL CORP. | Unknown | $655M | — | — | — | 4.7% |
A lender to private mid-market companies — not a bank
A BDC is a publicly-traded fund that lends money to private mid-market companies (typically $10M–$100M loans). They\'re structured like REITs — must distribute 90%+ of taxable income, so they pay big dividends. The right metrics are Price / Net Asset Value (P/NAV), dividend coverage, and the non-accrual rate (% of loans not paying interest). Standard bank metrics don\'t apply because BDCs don\'t take deposits.
- Non-accrual rate — % of loans not paying interest. Above 3% is yellow flag, above 5% is red. In the 10-K\'s "Schedule of Investments".
- Dividend coverage — Net Investment Income (NII) per share vs. distributions per share. Below 100% means they\'re paying out of capital.
- Leverage ratio — debt-to-equity. SEC caps BDCs at 2:1; most run 1.0-1.5×. Higher = more dividend but more risk.
- Originations vs repayments — Is the loan book growing or shrinking?
Quality & solvency checks
Cheap stocks can be cheap for a reason. These screens warn when a low valuation comes paired with structural fragility.
Why it matters: Cheap-looking stocks (low P/E or P/B) often have low Z-scores because the market knows the company is dying. Z-score warns you before you fall into a value trap.
Reference: > 3.0 = safe zone · 1.81–3.0 = grey zone · < 1.81 = distress zone
Full explanation →
BDCs are lenders — their balance sheets are loan portfolios funded with leverage, exactly the structure Altman Z misreads as distress. Judge them on Net Asset Value, the leverage ratio (capped at 2:1) and non-accrual rate instead.
Why it matters: High score = fundamentals improving. Low score = deteriorating. Especially powerful for filtering cheap stocks: cheap + high F-score historically outperforms; cheap + low F-score is often a value trap.
Reference: 7–9 = strong · 4–6 = mediocre · 0–3 = weak
Full explanation →
Piotroski F's checks (operating cash flow, gross-margin trend, current ratio, asset turnover) assume an industrial cost structure, so they misread asset-heavy or financial businesses like this one — a healthy REIT, utility, pipeline, BDC/fund or holding company can score low for reasons that aren't weakness. See the sector lens above for the metrics that actually matter.
What if you assume different inputs?
Here's where we land — and what happens if you change the assumptions. Drag the sliders to set your own Discount RateDiscount Rate — The annual return you demand for taking single-stock risk instead of buying a safe Treasury or index fund.
Why it matters: Higher discount rate = stricter valuation (a stock has to produce more cash to be worth holding). Lower = more generous.
Reference: 8–12% is standard · 9–10% matches S&P 500 historical return · Below 7% is illogical for single-stock risk
Full explanation → (the annual return you demand for single-stock risk) and terminal growth; the value updates live so you can see whether the stock looks cheaper or richer. The discount rate starts at 11.5%, the figure our model used for TSLX. Open Advanced to also change beta, growth and the rate path.
Note: at default inputs this calculator mirrors the headline model's three-scenario weighting (conservative/base/optimistic, 40/35/25), so its opening value should land close to the headline intrinsic value of $26.34. A small gap is rounding; a large one would be a data problem — and we check for it below.
7.9% — beta-based (CAPM), from this stock's BetaBeta — How much the stock moves when the overall market moves. 1.0 = moves with the market; 1.5 = moves 50% more than the market.
Why it matters: Higher beta = more volatile = should demand higher discount rate. Low beta stocks (utilities, consumer staples) move less.
Reference: Most stocks 0.5–1.5 · Defensives ~0.3 · High-vol tech ~1.5–2.0
Full explanation → of 0.61. The safe Treasury rate plus a premium scaled by how much more (or less) volatile the stock is than the market.
11.5% — sector/quality tier. A simpler hurdle set by industry and business durability: lower for stable, wide-moat companies; higher for speculative or micro-caps.
The headline value and this calculator start at 11.5% — the more conservative sector/quality rate (we use the more conservative sector/quality rate when model applicability is limited or the balance sheet is stretched). Drag the slider to the other rate to see the full range.
-28.7%
At the default assumptions the flat path lands near our published value of $26.34. Move any slider to recompute it with your own.
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⚙ Advanced — tinker with every input (beta, growth, rate path, margin → full intrinsic value)
The model estimates TSLX is deep_undervalued; the price is 31.6% BELOW intrinsic valueIntrinsic Value — Our DCF model's estimate of what each share is mathematically worth based on projected cash flows.
Why it matters: Compare to current price. Below IV = potentially undervalued. Above IV = priced for growth that must actually happen.
Reference: Model-derived; quality depends on data and assumptions.
Full explanation → (a 31.6% discount / margin of safetyMargin of Safety — How much room there is between the current price and intrinsic value, in your favor.
Why it matters: Benjamin Graham's core idea: only buy when there is enough discount that you can be wrong about your assumptions and still not lose money.
Reference: 20%+ is the classic Graham target · 30%+ for higher-risk companies
Full explanation →); equivalently the intrinsic value is about 46% ABOVE the price. The market is likely discounting TSLX due to its rising long-term debt, which increased from $1186M to $1743M, and its inconsistent operating cash flow, which has been positive in only 2 of the last 5 years. The biggest risk to our model's base assumptions is that operating cash flow continues to be inconsistent or declines further, rather than stabilizing around the modeled -5.0% rate.
As of 11 days ago
Anatomy of a share
What you're buying per share. Bars are at the same scale so you can see the relative size of revenue, costs, cash flow, and debt — not just read them in a table.
What's free cash flow / what do these mean?
Revenue per share — how much the business earns from customers, divided by the number of shares outstanding. Top of the income statement.
Earnings per share — profit left after operating costs, interest, and taxes, per share. Two versions appear on this page and are not interchangeable: GAAP diluted EPS uses the company's weighted-average diluted share count during the reporting period (this is the "earnings" in "price-to-earnings"); net income per current share divides annual net income by today's share count. They differ whenever the share count has changed.
Owner-earnings free cash flow per share — the cash the business produces for shareholders. Savng's owner-earnings FCF subtracts capital expenditures and stock-based compensation from operating cash flow (SBC is a real dilution cost even though it's non-cash). This is deliberately more conservative than "standard" FCF, which subtracts only capital expenditures — so our figure is lower than the headline FCF you'll see elsewhere. FCF funds dividends, buybacks, debt repayment, and acquisitions; a company can report positive earnings yet negative FCF.
Debt per share — total interest-bearing borrowings divided by shares. High debt-per-share next to thin FCF-per-share is a fragility signal.
What you actually need to decide
Every stock price is a disagreement. Here's the single thing that must go right for the bulls, the single thing that breaks the thesis, and the concrete signposts to watch so you can update your view as real results arrive.
- Stabilization or reduction in long-term debt below $1743M
- Consistent positive operating cash flow for consecutive periods
- Improvement in the franchise/durability score from 0/5
The trend, in plain numbers (2024 → 2025)
Straight from the financial statements — no model, no opinion. For a small or unprofitable company, the direction of these numbers usually tells you more than any single valuation.
- Free cash flow turned positive at $401.6M.
- Net income fell -9% to $170.5M.
Management & Leadership
Joshua Easterly serves as the Chief Executive Officer and Co-Chairman of Sixth Street Specialty Lending, Inc. He has held these roles since the company's inception, guiding its strategy in direct lending. Michael Saraceni is the Chief Financial Officer.
What They Make
Sixth Street Specialty Lending, Inc. is a business development company (BDC) that provides financing solutions to middle-market companies. They primarily lend to and invest in private companies, with the companies themselves being the paying counterparties for interest and fees.
End Markets
Revenue Drivers
Why Is It Priced Like This?
Why Customers Pay
TSLX trades 31.6% below the model's intrinsic valueIntrinsic Value — Our DCF model's estimate of what each share is mathematically worth based on projected cash flows.
Why it matters: Compare to current price. Below IV = potentially undervalued. Above IV = priced for growth that must actually happen.
Reference: Model-derived; quality depends on data and assumptions.
Full explanation →. Separately, the reverse DCFReverse DCF — Instead of asking "what is this stock worth?", asks "what growth rate is the current market price already assuming?"
Why it matters: It crystallizes the bull thesis as a single number you can argue with. If the market expects 40% growth for 10 years and you do not believe that, the stock is overvalued.
Reference: 10–15% = sustainable for strong companies · 20–25% = exceptional · 30%+ = historically very rare
Full explanation → implies the price is consistent with roughly a -13.9% annual per-share cash-flow decline. This significant discount and implied decline likely stem from the company's rising long-term debt, which increased from $1186M to $1743M, and its inconsistent operating cash flow, which has been positive in only 2 of 5 years. The market appears to be pricing in a material multi-year contraction in per-share cash flow.
Three Scenarios, Weighted
| Scenario | IV | vs Price | Weight |
|---|---|---|---|
| Conservative | $22.96 | 22.3% | 40% |
| Base | $26.75 | 42.5% | 35% |
| Optimistic | $31.17 | 66.1% | 25% |
| Weighted | $26.34 | 40.3% | 100% |
What has to be true
Today's price implies a material multi-year contraction in cash flow (implied growth ≈ -13.9%/yr) — so historical growth anchors don't apply here. The real question isn't "can it grow like Apple did" but "is the decline the market is pricing in real, or an overreaction?" The Financial Health trend and the Reverse-DCF above are the right lenses for that.
Business Model & Valuation
How They Make Money
TSLX pays dividends, and funds its operations and investments through a combination of retained earnings, debt, and equity raises.
Free Cash Flow DCF Medium
Owner-earnings FCF DCF: positive free cash flow (operating cash flow − capex − stock-based comp) in a sector suited for cash-flow-based valuation. FCF negative in 3/5 years.
Show advanced inputs
| EpsGrowth | -9.7% |
| HistoricalFcfGrowth | 162.7753 |
| SectorDefault | 6.0% |
| SectorDefaultSource | Unknown sector default |
| BestEstimate | -5.0% |
| Method | blend(70% eps_cagr, 30% sector) |
| GrowthBasis | per_share |
What this model does NOT do: this is a consolidated owner-earnings FCF model. Standalone segment assumptions: none. It does not project its revenue segments independently; their combined effect is embedded in the historical revenue and cash-flow trend the model extrapolates. The calculator above can only approximate a segment's impact through the single consolidated growth rate — it cannot model any one line separately. For a true segment-level view, build a separate model from the company's segment disclosures.
Maturity & Competitive Position
Net income has been positive in 5 of the last 5 years, though operating cash flow has been positive in only 2 of 5 years.
Geography & Markets
Sixth Street Specialty Lending, Inc. primarily focuses on the U.S. middle-market. Geographic mix data is not available from current data sources.
Geographic Risks
Market Signals
These are timing signals, not value signals — they describe the stock's recent price behavior, not what the business is worth. Use them for the "the thesis looks good, but is now the moment?" question. Each tile below explains what it's saying.
Why it matters: Short-term contrarian indicator. Extreme readings often precede mean reversion, though not always.
Reference: 30–70 normal · >70 overbought · <30 oversold
Full explanation → (14)60.8NeutralMomentum is balanced — neither overbought nor oversold.
Why it matters: When the fast line crosses above the slow line, short-term momentum is turning up; below, turning down. A timing cue, not a value signal.
Reference: Line above signal = bullish momentum · below = bearish
Full explanation →BullishLine above signalThe fast trend is above the slow trend — short-term momentum is currently upward.
Technicals describe price, not the business. A great company can have a "bearish" tape (a buying chance) and a weak one a "bullish" tape (a trap). Pair these with the valuation and health sections above.
QUALITY
Data Quality & Risk Flags (2 notes — click to expand/collapse)
Guardrail Notes (2)
- Terminal growth set to 0% — the lowest of the applicable caps (binding: 80% of near-term growth (-5%)). We use one effective terminal rate everywhere on the page.
- Illiquidity discount 7% applied (small/micro-cap — harder to exit, demand a margin).
FINANCIALS
Financial Statements (5-year tables — click to expand)
From Sixth Street Specialty Lending, Inc.'s SEC filings (EDGAR).
Income (5yr)
| Year | Revenue | Net Income | EPS |
|---|---|---|---|
| 2025 | — | 170.5M | $1.81 |
| 2024 | — | 186.6M | $2.03 |
| 2023 | — | 222.0M | $2.61 |
| 2022 | — | 108.1M | $1.38 |
| 2021 | — | 211.8M | $2.79 |
Cash Flow (5yr)
| Year | Operating CF | CapEx | − SBC | Free Cash Flow |
|---|---|---|---|---|
| 2025 | 401.6M | — | — | 401.6M |
| 2024 | -45.5M | — | — | -45.5M |
| 2023 | -236.8M | — | — | -236.8M |
| 2022 | -224.5M | — | — | -224.5M |
| 2021 | 2.5M | — | — | 2.5M |
How we define FCF: operating cash flow − capital expenditure − stock-based compensation (owner-earnings basis — SBC is a real cost to shareholders even though it's non-cash). This is the same owner-earnings FCF definition the valuation model uses.
Balance Sheet
| Total Assets | 3.4B |
| Total Liabilities | 1.8B |
| Equity | 1.6B |
| Total Debt | 1.7B |