Head to Head Survey: Morgan Stanley Direct Lending Fund (NYSE:MSDL) & XP (NASDAQ:XP)

XP (NASDAQ:XP) and Morgan Stanley Direct Lending Fund (NYSE:MSDL) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, risk, valuation, dividends and profitability.

Dividends

XP pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Morgan Stanley Direct Lending Fund pays an annual dividend of $1.80 per share and has a dividend yield of 13.3%. XP pays out 20.9% of its earnings in the form of a dividend. Morgan Stanley Direct Lending Fund pays out 260.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares XP and Morgan Stanley Direct Lending Fund”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
XP	$3.30 billion	4.92	$925.91 million	$1.91	15.80
Morgan Stanley Direct Lending Fund	$397.29 million	2.87	$122.09 million	$0.69	19.68

XP has higher revenue and earnings than Morgan Stanley Direct Lending Fund. XP is trading at a lower price-to-earnings ratio than Morgan Stanley Direct Lending Fund, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

59.2% of XP shares are owned by institutional investors. 0.3% of Morgan Stanley Direct Lending Fund shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares XP and Morgan Stanley Direct Lending Fund’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
XP	27.20%	22.19%	1.33%
Morgan Stanley Direct Lending Fund	15.97%	9.61%	4.28%

Volatility and Risk

XP has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, Morgan Stanley Direct Lending Fund has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for XP and Morgan Stanley Direct Lending Fund, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
XP	0	2	5	0	2.71
Morgan Stanley Direct Lending Fund	0	6	1	0	2.14

XP presently has a consensus target price of $28.80, suggesting a potential downside of 4.59%. Morgan Stanley Direct Lending Fund has a consensus target price of $15.50, suggesting a potential upside of 14.16%. Given Morgan Stanley Direct Lending Fund’s higher probable upside, analysts plainly believe Morgan Stanley Direct Lending Fund is more favorable than XP.

Summary

XP beats Morgan Stanley Direct Lending Fund on 11 of the 16 factors compared between the two stocks.

About XP

XP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers XP Educação, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.

About Morgan Stanley Direct Lending Fund

Morgan Stanley Direct Lending Fund is a business development company. It is a non-diversified, externally managed specialty finance company focused on lending to middle-market companies. Morgan Stanley Direct Lending Fund is based in NEW YORK.