Analyzing SLR Investment (NASDAQ:SLRC) and Morgan Stanley (NYSE:MS)

SLR Investment (NASDAQ:SLRC) and Morgan Stanley (NYSE:MS) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Institutional and Insider Ownership

35.3% of SLR Investment shares are owned by institutional investors. Comparatively, 84.2% of Morgan Stanley shares are owned by institutional investors. 8.8% of SLR Investment shares are owned by company insiders. Comparatively, 0.2% of Morgan Stanley shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

SLR Investment has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Morgan Stanley has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500.

Dividends

SLR Investment pays an annual dividend of $1.24 per share and has a dividend yield of 10.3%. Morgan Stanley pays an annual dividend of $4.60 per share and has a dividend yield of 2.2%. SLR Investment pays out 91.9% 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 pays out 37.2% of its earnings in the form of a dividend. Morgan Stanley has raised its dividend for 12 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for SLR Investment and Morgan Stanley, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SLR Investment	2	4	2	0	2.00
Morgan Stanley	1	11	11	3	2.62

SLR Investment presently has a consensus target price of $14.10, suggesting a potential upside of 17.21%. Morgan Stanley has a consensus target price of $224.75, suggesting a potential upside of 8.96%. Given SLR Investment’s higher possible upside, equities analysts plainly believe SLR Investment is more favorable than Morgan Stanley.

Valuation and Earnings

This table compares SLR Investment and Morgan Stanley”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SLR Investment	$85.42 million	7.68	$92.54 million	$1.35	8.91
Morgan Stanley	$119.66 billion	2.72	$16.86 billion	$12.37	16.68

Morgan Stanley has higher revenue and earnings than SLR Investment. SLR Investment is trading at a lower price-to-earnings ratio than Morgan Stanley, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares SLR Investment and Morgan Stanley’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SLR Investment	35.20%	7.96%	3.09%
Morgan Stanley	15.65%	19.31%	1.33%

Summary

Morgan Stanley beats SLR Investment on 12 of the 18 factors compared between the two stocks.

About SLR Investment

SLR Investment Corp. is a business development company specializing in secured debt (first lien unitranche and second lien), subordinated (unsecured) debt, minority equity, leveraged buyouts, acquisitions, recapitalizations, general refinancing, growth capital and strategic income-oriented control equity investments in leveraged middle market companies. The fund invests in aerospace and defense; air freight & logistics; asset management; automotive; banking; beverage, food and tobacco; building products; buildings and real estate; broadcasting and entertainment; cargo transport; commercial services and supplies; communications equipment; chemicals, plastics and rubber; containers, packaging and glass; construction & engineering; diversified/conglomerate manufacturing; consumer Finance; distributors; diversified/conglomerate services; diversified financial services; diversified real estate activities; food products; Footwear; Education Services; diversified telecommunications services; electronics; farming and agriculture; finance; grocery; health care equipment and supplies; health care facilities; education and childcare; home and office furnishing, durable consumer products; hotels, motels, inns and gaming; insurance; restaurants, leisure, amusement, and entertainment; leisure equipment tolls and services, media, multiline retail, multi sector holdings; paper and forest products; personal products; professional services, research and consulting services, software; specialty retail; textiles apparel and luxury goods, thrifts and mortgage finance, trading companies and distributors, utilities, and wireless telecommunication services; industrial conglomerates; internet software and services, IT services, machinery; mining, steel, iron, and non-precious metals; oil and gas; personal, food and miscellaneous services; printing and publishing; retail stores; telecommunications; textiles and leather; and utilities. It also invests in life sciences with focus on specialty pharmaceuticals, medical devices, biotech, health Care Providers and services; health Care technology, enabling technologies and tools. The fund primarily invests in United States. The fund’s investments generally range between $5 million and $100 million. The fund invests in companies with revenues between $50 million and $1 billion and EBITDA between $15 million and $100 million. It invests in the form of senior secured loans, mezzanine loans, and equity securities. It may also seek investments in thinly traded public companies and also make secondary investments. The fund makes non-control equity investments. It primarily exits within three years of the initial capital commitment.

About Morgan Stanley

Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals in the Americas, Europe, the Middle East, Africa, and Asia. It operates through Institutional Securities, Wealth Management, and Investment Management segments. The Institutional Securities segment offers capital raising and financial advisory services, including services related to the underwriting of debt, equity, and other securities, as well as advice on mergers and acquisitions, restructurings, real estate, and project finance. This segment also provides equity and fixed income products comprising sales, financing, prime brokerage, and market-making services; foreign exchange and commodities; corporate and commercial real estate loans, commercial mortgage and secured lending facilities, and financing for sales and trading customers, and asset-backed and mortgage lending; and wealth management services, investment, and research services. The Wealth Management segment offers financial advisor-led brokerage, custody, administrative, and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; annuity and insurance products; securities-based lending, residential real estate loans, and other lending products; banking; and retirement plan services to individual investors and small to medium-sized businesses and institutions. The Investment Management segment provides equity, fixed income, alternatives and solutions, and liquidity and overlay services to benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance companies, third-party fund sponsors, corporations, and individuals through institutional and intermediary channels. The company was founded in 1924 and is headquartered in New York, New York.