Golub Capital BDC (NASDAQ:GBDC) & Morgan Stanley Direct Lending Fund (NYSE:MSDL) Critical Analysis

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Morgan Stanley Direct Lending Fund	15.97%	9.61%	4.28%
Golub Capital BDC	21.45%	9.91%	4.39%

Risk & 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, Golub Capital BDC has a beta of 0.39, meaning that its stock price is 61% less volatile than the S&P 500.

Insider & Institutional Ownership

42.4% of Golub Capital BDC shares are owned by institutional investors. 0.3% of Morgan Stanley Direct Lending Fund shares are owned by insiders. Comparatively, 1.4% of Golub Capital BDC shares are owned by 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 $1.80 per share and has a dividend yield of 12.0%. Golub Capital BDC pays an annual dividend of $1.32 per share and has a dividend yield of 10.3%. 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. Golub Capital BDC pays out 203.1% 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 & Valuation

This table compares Morgan Stanley Direct Lending Fund and Golub Capital 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	$0.69	21.79
Golub Capital BDC	$870.78 million	3.81	$376.65 million	$0.65	19.66

Golub Capital BDC has higher revenue and earnings than Morgan Stanley Direct Lending Fund. Golub Capital 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.

Analyst Ratings

This is a breakdown of current ratings and target prices for Morgan Stanley Direct Lending Fund and Golub Capital 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
Golub Capital BDC	0	2	4	1	2.86

Morgan Stanley Direct Lending Fund currently has a consensus price target of $15.50, suggesting a potential upside of 3.11%. Golub Capital BDC has a consensus price target of $13.90, suggesting a potential upside of 8.76%. Given Golub Capital BDC’s stronger consensus rating and higher probable upside, analysts plainly believe Golub Capital BDC is more favorable than Morgan Stanley Direct Lending Fund.

Summary

Golub Capital BDC beats Morgan Stanley Direct Lending Fund on 13 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 Golub Capital BDC

Golub Capital BDC, Inc. (GBDC) is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. It typically invests in diversified consumer services, automobiles, healthcare technology, insurance, health care equipment and supplies, hotels, restaurants and leisure, healthcare providers and services, IT services and specialty retails. It seeks to invest in the United States. It primarily invests in first lien traditional senior debt, first lien one stop, junior debt and equity, senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.