Morgan Stanley Direct Lending Fund Common Stock (MSDL)

FairStock Score: 56/100 — STEADY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look for Mr. Market to misprice durable assets, and Morgan Stanley Direct Lending Fund is a classic asset-play candidate: at the 2026-10-13 close of $13.15, it trades at 0.67 times book value by FairStock's calculation, and its $1.1 billion market cap sits against a Graham Number of $17.40, giving a 24.43% margin of safety. The 12.30% dividend yield and 25.6% trailing FCF yield are eye-catching, while a Piotroski score of 7/9 suggests the balance sheet and profitability signals are not broken. The latest filed quarter, fiscal Q2 2026, the quarter ended 2026-06-30, showed net income of $7.9 million and diluted EPS of $0.09, a rebound from fiscal Q1 2026, the quarter ended 2026-03-31, when net income was -$4.5 million and diluted EPS was -$0.05. Still, the trend is troubling: in fiscal year 2023, net income was $231.0 million and diluted EPS $3.11; in fiscal year 2024, $215.6 million and $2.43; and in fiscal year 2025, $122.1 million and $1.40. The FairStock P/E of 19.06 on EPS of $0.69, ROE of 3.48%, and ROCE of 4.89% do not scream quality. Debt-to-equity of 1.20 and an Altman Z-score of 0.29 warn that leverage and credit risk are real in a private-debt portfolio. A true moat is hard to prove; this is a spread business dependent on underwriting and funding costs. The discount to book may be justified if asset marks are optimistic. I would want evidence that the fiscal Q2 2026 earnings are the start of a recovery, not a bounce before further credit deterioration.

In plain English: Morgan Stanley Direct Lending Fund lends money to small and mid-sized private companies, often ones backed by private equity. The business has made money recently, but profits are much lower than in earlier years and one recent quarter lost money. The shares look cheap compared with the fund's assets and a conservative value estimate, but the high dividend and borrowed money mean there is real risk.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer