Is Morgan Stanley Direct Lending Fund overvalued or undervalued?

As of 7 November 2024, the valuation grade for Morgan Stanley Direct Lending Fund has moved from attractive to very attractive, indicating a significant improvement in its perceived value. The company is currently undervalued, with a P/E ratio of 9, which is lower than its peer average of approximately 8.69. Additionally, the EV to EBITDA ratio stands at 5.03, while the industry average is around 4.98, suggesting that the company is trading at a reasonable multiple compared to its peers. The Price to Book Value is 0.93, further supporting the undervaluation thesis.
In comparison to notable peers, Morgan Stanley Direct Lending Fund's P/E ratio is lower than that of its closest competitor, which has a P/E of 8.69, indicating a more favorable valuation. The company also boasts a solid ROCE of 18.50% and a dividend yield of 2.61%, which adds to its attractiveness as an investment. Despite recent underperformance against the S&P 500, with a year-to-date return of -8.23% compared to the S&P's 2.44%, the fundamental metrics suggest that the stock is positioned for potential upside as market conditions improve.