Contrasting Goldman Sachs BDC (NYSE:GSBD) & Morgan Stanley Direct Lending Fund (NYSE:MSDL)

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

Dividends

Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 13.2%. Morgan Stanley Direct Lending Fund pays an annual dividend of $1.80 per share and has a dividend yield of 11.8%. 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. 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.

Analyst Ratings

This is a summary of recent ratings for Goldman Sachs BDC and Morgan Stanley Direct Lending Fund, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Goldman Sachs BDC	2	4	0	0	1.67
Morgan Stanley Direct Lending Fund	0	6	1	0	2.14

Goldman Sachs BDC currently has a consensus price target of $9.17, suggesting a potential downside of 5.55%. Morgan Stanley Direct Lending Fund has a consensus price target of $15.54, suggesting a potential upside of 1.81%. Given Morgan Stanley Direct Lending Fund’s stronger consensus rating and higher possible upside, analysts clearly believe Morgan Stanley Direct Lending Fund is more favorable than Goldman Sachs BDC.

Institutional and Insider Ownership

28.7% of Goldman Sachs BDC shares are owned by institutional investors. 0.1% of Goldman Sachs BDC shares are owned by company insiders. Comparatively, 0.3% of Morgan Stanley Direct Lending Fund shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Goldman Sachs BDC	21.32%	10.94%	4.66%
Morgan Stanley Direct Lending Fund	22.84%	9.73%	4.37%

Risk & Volatility

Goldman Sachs BDC has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, Morgan Stanley Direct Lending Fund has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500.

Earnings and Valuation

This table compares Goldman Sachs BDC and Morgan Stanley Direct Lending Fund”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Goldman Sachs BDC	$365.57 million	2.99	$119.27 million	$0.65	14.93
Morgan Stanley Direct Lending Fund	$397.29 million	3.26	$122.09 million	$1.01	15.11

Morgan Stanley Direct Lending Fund has higher revenue and earnings than Goldman Sachs BDC. Goldman Sachs 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.

Summary

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

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.

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.