Medallion Financial (NASDAQ:MFIN – Get Free Report) and Morgan Stanley Direct Lending Fund (NYSE:MSDL – Get Free Report) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, valuation, dividends and risk.
Volatility & Risk
Medallion Financial has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500. Comparatively, Morgan Stanley Direct Lending Fund has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.
Analyst Ratings
This is a summary of current ratings and target prices for Medallion Financial and Morgan Stanley Direct Lending Fund, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Medallion Financial | 0 | 1 | 1 | 1 | 3.00 |
| Morgan Stanley Direct Lending Fund | 0 | 4 | 3 | 0 | 2.43 |
Earnings and Valuation
This table compares Medallion Financial 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 | |
| Medallion Financial | $229.57 million | 0.97 | $35.88 million | $1.71 | 5.58 |
| Morgan Stanley Direct Lending Fund | $416.08 million | 3.49 | $215.56 million | $1.65 | 10.15 |
Morgan Stanley Direct Lending Fund has higher revenue and earnings than Medallion Financial. Medallion Financial 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.
Profitability
This table compares Medallion Financial and Morgan Stanley Direct Lending Fund’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Medallion Financial | 12.12% | 9.40% | 1.55% |
| Morgan Stanley Direct Lending Fund | 35.92% | 10.21% | 4.70% |
Dividends
Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 5.0%. Morgan Stanley Direct Lending Fund pays an annual dividend of $2.00 per share and has a dividend yield of 11.9%. Medallion Financial pays out 28.1% of its earnings in the form of a dividend. 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.
Institutional and Insider Ownership
40.6% of Medallion Financial shares are held by institutional investors. 24.6% of Medallion Financial shares are held by insiders. Comparatively, 0.2% of Morgan Stanley Direct Lending Fund shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Summary
Morgan Stanley Direct Lending Fund beats Medallion Financial on 9 of the 17 factors compared between the two stocks.
About Medallion Financial
Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, 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.
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