Head to Head Analysis: Nuveen Churchill Direct Lending (NYSE:NCDL) vs. Morgan Stanley Direct Lending Fund (NYSE:MSDL)

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Nuveen Churchill Direct Lending and Morgan Stanley Direct Lending Fund, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nuveen Churchill Direct Lending	0	3	1	0	2.25
Morgan Stanley Direct Lending Fund	1	3	3	0	2.29

Nuveen Churchill Direct Lending currently has a consensus target price of $16.00, suggesting a potential upside of 9.59%. Morgan Stanley Direct Lending Fund has a consensus target price of $18.08, suggesting a potential upside of 5.84%. Given Nuveen Churchill Direct Lending’s higher possible upside, equities research analysts clearly believe Nuveen Churchill Direct Lending is more favorable than Morgan Stanley Direct Lending Fund.

Dividends

Nuveen Churchill Direct Lending pays an annual dividend of $1.80 per share and has a dividend yield of 12.3%. Morgan Stanley Direct Lending Fund pays an annual dividend of $2.00 per share and has a dividend yield of 11.7%. Nuveen Churchill Direct Lending pays out 98.9% 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 Direct Lending Fund pays out 103.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Nuveen Churchill Direct Lending is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Nuveen Churchill Direct Lending	43.35%	11.88%	5.25%
Morgan Stanley Direct Lending Fund	42.65%	11.24%	5.28%

Valuation & Earnings

This table compares Nuveen Churchill Direct Lending and Morgan Stanley Direct Lending Fund”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nuveen Churchill Direct Lending	$224.04 million	3.22	$116.32 million	$1.82	8.02
Morgan Stanley Direct Lending Fund	$416.08 million	3.57	$215.56 million	$1.93	8.85

Morgan Stanley Direct Lending Fund has higher revenue and earnings than Nuveen Churchill Direct Lending. Nuveen Churchill Direct Lending 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.

Risk and Volatility

Nuveen Churchill Direct Lending has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, 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.

Summary

Morgan Stanley Direct Lending Fund beats Nuveen Churchill Direct Lending on 8 of the 14 factors compared between the two stocks.

About Nuveen Churchill Direct Lending

Nuveen Churchill Direct Lending Corp. is a specialty finance company focused primarily on investing in senior secured loans to private equity-owned U.S. middle market companies. It has elected to be regulated as a business development company. Nuveen Churchill Direct Lending Corp. is based in NEW YORK.

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.