Amalgamated Financial (NASDAQ:AMAL) vs. Morgan Stanley Direct Lending Fund (NYSE:MSDL) Critical Review

Morgan Stanley Direct Lending Fund (NYSE:MSDL) and Amalgamated Financial (NASDAQ:AMAL) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

Risk and Volatility

Morgan Stanley Direct Lending Fund has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500. Comparatively, Amalgamated Financial has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Institutional and Insider Ownership

75.9% of Amalgamated Financial shares are owned by institutional investors. 0.2% of Morgan Stanley Direct Lending Fund shares are owned by company insiders. Comparatively, 1.3% of Amalgamated Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Morgan Stanley Direct Lending Fund pays an annual dividend of $2.00 per share and has a dividend yield of 12.3%. Amalgamated Financial pays an annual dividend of $0.56 per share and has a dividend yield of 1.5%. 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. Amalgamated Financial pays out 16.4% of its earnings in the form of a dividend. Amalgamated Financial has raised its dividend for 4 consecutive years.

Profitability

This table compares Morgan Stanley Direct Lending Fund and Amalgamated Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Morgan Stanley Direct Lending Fund	35.92%	10.21%	4.70%
Amalgamated Financial	23.05%	14.80%	1.31%

Analyst Ratings

This is a summary of recent ratings for Morgan Stanley Direct Lending Fund and Amalgamated Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Morgan Stanley Direct Lending Fund	0	6	1	0	2.14
Amalgamated Financial	0	2	1	0	2.33

Morgan Stanley Direct Lending Fund currently has a consensus target price of $17.58, suggesting a potential upside of 8.28%. Amalgamated Financial has a consensus target price of $33.50, suggesting a potential downside of 11.02%. Given Morgan Stanley Direct Lending Fund’s higher possible upside, analysts plainly believe Morgan Stanley Direct Lending Fund is more favorable than Amalgamated Financial.

Earnings and Valuation

This table compares Morgan Stanley Direct Lending Fund and Amalgamated Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Morgan Stanley Direct Lending Fund	$416.08 million	3.39	$215.56 million	$1.65	9.84
Amalgamated Financial	$453.17 million	2.49	$104.44 million	$3.41	11.04

Morgan Stanley Direct Lending Fund has higher earnings, but lower revenue than Amalgamated Financial. Morgan Stanley Direct Lending Fund is trading at a lower price-to-earnings ratio than Amalgamated Financial, indicating that it is currently the more affordable of the two stocks.

Summary

Amalgamated Financial beats Morgan Stanley Direct Lending Fund on 10 of the 16 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 Amalgamated Financial

Amalgamated Financial Corp. operates as the bank holding company for Amalgamated Bank that provides commercial and retail banking, investment management, and trust and custody services for commercial and retail customers in the United States. The company accepts various deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts, NOW accounts, and certificates of deposit. It also provides various commercial loans comprising commercial and industrial, multifamily mortgage, and commercial real estate loans; residential mortgage loans; and retail loans, such as residential real estate, consumer solar, and consumer and other loans. In addition, the company offers online banking, bill payment, online cash management, and safe deposit box rental services; debit and ATM cards; and trust, custody, and investment management services comprising asset safekeeping, corporate actions, income collections, proxy, account transition, asset transfers, and conversion management services. Further, it provides investment products, such as funds spanning equity, fixed-income, real estate, and alternative investment products; and brokerage, asset management, and insurance products. Amalgamated Financial Corp. was founded in 1923 and is headquartered in New York, New York.