Ares Acquisition Co. II (NYSE:AACT) & Morgan Stanley Direct Lending (NYSE:MSDL) Critical Comparison

Ares Acquisition Co. II (NYSE:AACT) and Morgan Stanley Direct Lending (NYSE:MSDL) are both small-cap unclassified companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Profitability

This table compares Ares Acquisition Co. II and Morgan Stanley Direct Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ares Acquisition Co. II	N/A	-116.17%	4.47%
Morgan Stanley Direct Lending	62.34%	12.87%	6.39%

Earnings & Valuation

This table compares Ares Acquisition Co. II and Morgan Stanley Direct Lending’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ares Acquisition Co. II	N/A	N/A	$16.92 million	N/A	N/A
Morgan Stanley Direct Lending	$367.74 million	5.38	$231.01 million	$3.10	7.13

Morgan Stanley Direct Lending has higher revenue and earnings than Ares Acquisition Co. II.

Analyst Ratings

This is a breakdown of current ratings and price targets for Ares Acquisition Co. II and Morgan Stanley Direct Lending, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ares Acquisition Co. II	0	0	0	0	N/A
Morgan Stanley Direct Lending	0	4	2	0	2.33

Morgan Stanley Direct Lending has a consensus target price of $21.92, indicating a potential downside of 0.65%. Given Morgan Stanley Direct Lending’s higher probable upside, analysts clearly believe Morgan Stanley Direct Lending is more favorable than Ares Acquisition Co. II.

Institutional and Insider Ownership

73.0% of Ares Acquisition Co. II shares are owned by institutional investors. 0.2% of Morgan Stanley Direct Lending shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Morgan Stanley Direct Lending beats Ares Acquisition Co. II on 8 of the 9 factors compared between the two stocks.

About Ares Acquisition Co. II

Ares Acquisition Corporation II does not have significant operations. It focuses on effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Ares Acquisition Corporation II was incorporated in 2021 and is based in New York, New York.

About Morgan Stanley Direct Lending

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.