Analyzing TriplePoint Venture Growth BDC (NYSE:TPVG) & Morgan Stanley Direct Lending Fund (NYSE:MSDL)

TriplePoint Venture Growth BDC (NYSE:TPVG) and Morgan Stanley Direct Lending Fund (NYSE:MSDL) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, analyst recommendations, earnings, dividends and profitability.

Institutional & Insider Ownership

12.8% of TriplePoint Venture Growth BDC shares are owned by institutional investors. 1.5% of TriplePoint Venture Growth BDC shares are owned by insiders. Comparatively, 0.2% of Morgan Stanley Direct Lending Fund shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares TriplePoint Venture Growth BDC and Morgan Stanley Direct Lending Fund”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TriplePoint Venture Growth BDC	$108.65 million	2.50	$32.05 million	$0.85	7.91
Morgan Stanley Direct Lending Fund	$416.08 million	3.69	$215.56 million	$1.65	10.73

Morgan Stanley Direct Lending Fund has higher revenue and earnings than TriplePoint Venture Growth BDC. TriplePoint Venture Growth 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.

Dividends

TriplePoint Venture Growth BDC pays an annual dividend of $0.92 per share and has a dividend yield of 13.7%. Morgan Stanley Direct Lending Fund pays an annual dividend of $2.00 per share and has a dividend yield of 11.3%. TriplePoint Venture Growth BDC pays out 108.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. TriplePoint Venture Growth BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations and price targets for TriplePoint Venture Growth BDC and Morgan Stanley Direct Lending Fund, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TriplePoint Venture Growth BDC	3	4	0	0	1.57
Morgan Stanley Direct Lending Fund	0	5	2	0	2.29

TriplePoint Venture Growth BDC presently has a consensus target price of $6.25, suggesting a potential downside of 7.06%. Morgan Stanley Direct Lending Fund has a consensus target price of $17.75, suggesting a potential upside of 0.25%. Given Morgan Stanley Direct Lending Fund’s stronger consensus rating and higher probable upside, analysts plainly believe Morgan Stanley Direct Lending Fund is more favorable than TriplePoint Venture Growth BDC.

Profitability

This table compares TriplePoint Venture Growth 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
TriplePoint Venture Growth BDC	36.02%	12.88%	5.76%
Morgan Stanley Direct Lending Fund	35.92%	10.21%	4.70%

Risk & Volatility

TriplePoint Venture Growth BDC has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500. Comparatively, Morgan Stanley Direct Lending Fund has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500.

About TriplePoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a business development company specializing investments in venture capital-backed companies at the growth stage investments. It also provides debt financing to venture growth space companies which includes growth capital loans, secured and customized loans, equipment financings, revolving loans and direct equity investments. The fund seeks to invest in e-commerce, entertainment, technology and life sciences sector. Within technology the areas of focus include: Security, wireless communication equipments, network system and software, business applications software, conferencing equipments/services .big data, cloud computing, data storage, electronics, energy efficiency, hardware, information services, internet and media, networking, semiconductors, software, software as a service, and other technology related subsectors and within life sciences the areas of focus include: biotechnology, bio fuels/bio mass, diagnostic testing and bioinformatics, drug delivery, drug discovery, healthcare information systems, healthcare services, medical, surgical and therapeutic devices, pharmaceuticals and other life science related subsectors. Within growth capital loans it invests between $5 million and $50 million, for equipment financings it invests between $5 million and $25 million, for revolving loans it invests between $1 million and $25 million, and for direct equity investments it may invest between $0.1 million and $5 million (generally not exceeding 5% of the company’s total equity). The debt financing products are typically structured as lines of credit and it invests through warrants and secured loans. It targeted returns between 10% and 18%. It does not take board seat in the company.

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.