Morgan Stanley Direct Lending Fund (NYSE:MSDL – Get Free Report) and Goldman Sachs BDC (NYSE:GSBD – Get Free Report) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.
Valuation and Earnings
This table compares Morgan Stanley Direct Lending Fund and Goldman Sachs BDC”s 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 | 3.34 | $122.09 million | $1.01 | 15.49 |
| Goldman Sachs BDC | $365.57 million | 3.01 | $119.27 million | $0.65 | 15.02 |
Profitability
This table compares Morgan Stanley Direct Lending Fund and Goldman Sachs BDC’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Morgan Stanley Direct Lending Fund | 22.84% | 9.73% | 4.37% |
| Goldman Sachs BDC | 21.32% | 10.94% | 4.66% |
Institutional and Insider Ownership
28.7% of Goldman Sachs BDC shares are owned by institutional investors. 0.3% of Morgan Stanley Direct Lending Fund shares are owned by insiders. Comparatively, 0.1% of Goldman Sachs BDC shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Dividends
Morgan Stanley Direct Lending Fund pays an annual dividend of $1.80 per share and has a dividend yield of 11.5%. Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 13.1%. Morgan Stanley Direct Lending Fund pays out 178.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Goldman Sachs BDC pays out 196.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Analyst Ratings
This is a summary of recent recommendations for Morgan Stanley Direct Lending Fund and Goldman Sachs BDC, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Morgan Stanley Direct Lending Fund | 0 | 6 | 1 | 0 | 2.14 |
| Goldman Sachs BDC | 2 | 4 | 0 | 0 | 1.67 |
Morgan Stanley Direct Lending Fund presently has a consensus price target of $15.54, indicating a potential downside of 0.66%. Goldman Sachs BDC has a consensus price target of $9.17, indicating a potential downside of 6.13%. Given Morgan Stanley Direct Lending Fund’s stronger consensus rating and higher probable upside, equities analysts clearly believe Morgan Stanley Direct Lending Fund is more favorable than Goldman Sachs BDC.
Risk and Volatility
Morgan Stanley Direct Lending Fund has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, Goldman Sachs BDC has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500.
Summary
Morgan Stanley Direct Lending Fund beats Goldman Sachs BDC on 11 of the 16 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 Goldman Sachs BDC
Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies. It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities. The fund primarily invests in United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.
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