Reviewing Morgan Stanley Direct Lending Fund (NYSE:MSDL) & Kayne Anderson BDC (NYSE:KBDC)

Kayne Anderson BDC (NYSE:KBDC) 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 institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Volatility & Risk

Kayne Anderson BDC has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500. Comparatively, Morgan Stanley Direct Lending Fund has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500.

Earnings & Valuation

This table compares Kayne Anderson BDC and Morgan Stanley Direct Lending Fund”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kayne Anderson BDC	$213.11 million	4.89	$131.94 million	$1.51	10.10
Morgan Stanley Direct Lending Fund	$416.08 million	3.62	$215.56 million	$1.65	10.52

Morgan Stanley Direct Lending Fund has higher revenue and earnings than Kayne Anderson BDC. Kayne Anderson 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 summary of current ratings and price targets for Kayne Anderson BDC and Morgan Stanley Direct Lending Fund, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kayne Anderson BDC	0	1	3	0	2.75
Morgan Stanley Direct Lending Fund	0	5	2	0	2.29

Kayne Anderson BDC presently has a consensus target price of $15.50, suggesting a potential upside of 1.67%. Morgan Stanley Direct Lending Fund has a consensus target price of $17.75, suggesting a potential upside of 2.28%. Given Morgan Stanley Direct Lending Fund’s higher probable upside, analysts clearly believe Morgan Stanley Direct Lending Fund is more favorable than Kayne Anderson BDC.

Dividends

Kayne Anderson BDC pays an annual dividend of $1.60 per share and has a dividend yield of 10.5%. Morgan Stanley Direct Lending Fund pays an annual dividend of $2.00 per share and has a dividend yield of 11.5%. Kayne Anderson BDC pays out 106.0% 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 121.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Kayne Anderson 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
Kayne Anderson BDC	46.55%	10.40%	5.44%
Morgan Stanley Direct Lending Fund	35.92%	10.21%	4.70%

About Kayne Anderson BDC

Kayne Anderson BDC Inc. is a business development company which invests primarily in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to middle market companies. Kayne Anderson BDC Inc. is based in CHICAGO.

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.