Morgan Stanley Emerging Markets Debt (NYSE:MSD) and Apollo Investment (NASDAQ:AINV) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Volatility and Risk

Morgan Stanley Emerging Markets Debt has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500. Comparatively, Apollo Investment has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Institutional and Insider Ownership

25.3% of Morgan Stanley Emerging Markets Debt shares are owned by institutional investors. Comparatively, 39.5% of Apollo Investment shares are owned by institutional investors. 0.4% of Apollo Investment shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Morgan Stanley Emerging Markets Debt and Apollo Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Morgan Stanley Emerging Markets Debt 0 0 0 0 N/A
Apollo Investment 1 3 0 0 1.75

Apollo Investment has a consensus price target of $17.25, indicating a potential upside of 0.52%. Given Apollo Investment’s higher probable upside, analysts clearly believe Apollo Investment is more favorable than Morgan Stanley Emerging Markets Debt.

Profitability

This table compares Morgan Stanley Emerging Markets Debt and Apollo Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Morgan Stanley Emerging Markets Debt N/A N/A N/A
Apollo Investment 23.63% 10.96% 4.99%

Dividends

Morgan Stanley Emerging Markets Debt pays an annual dividend of $0.52 per share and has a dividend yield of 5.3%. Apollo Investment pays an annual dividend of $1.80 per share and has a dividend yield of 10.5%. Apollo Investment pays out 99.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Morgan Stanley Emerging Markets Debt and Apollo Investment’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Morgan Stanley Emerging Markets Debt N/A N/A N/A N/A N/A
Apollo Investment $255.08 million 4.48 $71.95 million $1.81 9.48

Apollo Investment has higher revenue and earnings than Morgan Stanley Emerging Markets Debt.

Summary

Apollo Investment beats Morgan Stanley Emerging Markets Debt on 9 of the 10 factors compared between the two stocks.

Morgan Stanley Emerging Markets Debt Company Profile

Morgan Stanley Emerging Markets Debt Fund, Inc. is a closed ended fixed income fund launched and managed by Morgan Stanley Investment Management Inc. The fund invests in fixed income markets of emerging market countries across the globe. It primarily invests in debt securities of government and government-related issuers, of entities organized to restructure outstanding debt of such issuers and debt securities of corporate issuers in or organized under the laws of emerging countries. The fund benchmarks the performance of its portfolio against the JP Morgan Emerging Markets Bond Global Index. Morgan Stanley Emerging Markets Debt Fund, Inc. was formed on May 6, 1993 and is domiciled in the United States.

Apollo Investment Company Profile

Apollo Investment Corporation is business development company specializing in middle market companies. It provides direct equity capital, mezzanine and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in warrants, makes equity co-investments, and may also invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations and credit-linked notes. The fund typically invests in building materials, business services, cable television, chemicals, consumer products, direct marketing, distribution, energy and utilities, financial services, healthcare, manufacturing, media, publishing, retail and transportation. It primarily invests between $20 million and $250 million in its portfolio companies. The fund seeks to make investments with stated maturities of five to 10 years.

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