Comparing Morgan Stanley Direct Lending Fund (NYSE:MSDL) & Barings Bdc (NYSE:BBDC)

Morgan Stanley Direct Lending Fund (NYSE:MSDL) and Barings Bdc (NYSE:BBDC) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Valuation & Earnings

This table compares Morgan Stanley Direct Lending Fund and Barings Bdc”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Morgan Stanley Direct Lending Fund	$397.29 million	3.18	$122.09 million	$1.40	10.53
Barings Bdc	$113.62 million	7.67	$101.92 million	$0.97	8.58

Morgan Stanley Direct Lending Fund has higher revenue and earnings than Barings Bdc. Barings Bdc 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.

Institutional and Insider Ownership

44.1% of Barings Bdc shares are owned by institutional investors. 0.2% of Morgan Stanley Direct Lending Fund shares are owned by company insiders. Comparatively, 0.6% of Barings Bdc shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Morgan Stanley Direct Lending Fund pays an annual dividend of $2.00 per share and has a dividend yield of 13.6%. Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 12.5%. Morgan Stanley Direct Lending Fund pays out 142.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc pays out 107.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has increased its dividend for 3 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Morgan Stanley Direct Lending Fund and Barings Bdc, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Morgan Stanley Direct Lending Fund	0	6	1	0	2.14
Barings Bdc	0	2	2	0	2.50

Morgan Stanley Direct Lending Fund currently has a consensus price target of $15.58, indicating a potential upside of 5.69%. Barings Bdc has a consensus price target of $9.67, indicating a potential upside of 16.12%. Given Barings Bdc’s stronger consensus rating and higher possible upside, analysts clearly believe Barings Bdc is more favorable than Morgan Stanley Direct Lending Fund.

Volatility and Risk

Morgan Stanley Direct Lending Fund has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500. Comparatively, Barings Bdc has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Morgan Stanley Direct Lending Fund	30.73%	9.88%	4.49%
Barings Bdc	36.50%	10.05%	4.27%

Summary

Barings Bdc beats Morgan Stanley Direct Lending Fund on 11 of the 17 factors compared between the two stocks.

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.

About Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.