Runway Growth Finance (NASDAQ:RWAY) and Chicago Atlantic BDC (NASDAQ:LIEN) Head-To-Head Analysis

Chicago Atlantic BDC (NASDAQ:LIEN) and Runway Growth Finance (NASDAQ:RWAY) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, profitability, earnings, dividends, analyst recommendations and valuation.

Earnings & Valuation

This table compares Chicago Atlantic BDC and Runway Growth Finance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chicago Atlantic BDC	$21.67 million	11.48	$9.62 million	$0.79	13.80
Runway Growth Finance	$144.63 million	2.25	$73.61 million	$1.47	6.12

Runway Growth Finance has higher revenue and earnings than Chicago Atlantic BDC. Runway Growth Finance is trading at a lower price-to-earnings ratio than Chicago Atlantic BDC, indicating that it is currently the more affordable of the two stocks.

Dividends

Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 12.5%. Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 14.7%. Chicago Atlantic BDC pays out 172.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Runway Growth Finance pays out 89.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Runway Growth Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Chicago Atlantic BDC and Runway Growth Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chicago Atlantic BDC	33.72%	5.80%	5.46%
Runway Growth Finance	38.92%	11.94%	5.80%

Insider & Institutional Ownership

4.4% of Chicago Atlantic BDC shares are owned by institutional investors. Comparatively, 64.6% of Runway Growth Finance shares are owned by institutional investors. 16.9% of Chicago Atlantic BDC shares are owned by company insiders. Comparatively, 1.0% of Runway Growth Finance shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for Chicago Atlantic BDC and Runway Growth Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chicago Atlantic BDC	0	3	0	0	2.00
Runway Growth Finance	0	4	3	0	2.43

Runway Growth Finance has a consensus price target of $11.10, suggesting a potential upside of 23.47%. Given Runway Growth Finance’s stronger consensus rating and higher possible upside, analysts clearly believe Runway Growth Finance is more favorable than Chicago Atlantic BDC.

Risk & Volatility

Chicago Atlantic BDC has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Runway Growth Finance has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Summary

Runway Growth Finance beats Chicago Atlantic BDC on 13 of the 16 factors compared between the two stocks.

About Chicago Atlantic BDC

Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.

About Runway Growth Finance

Runway Growth Finance Corp. is a business development company specializing investments in senior-secured loans to late stage and growth companies. It prefers to make investments in companies engaged in the technology, life sciences, healthcare and information services, business services and select consumer services and products sectors. It prefers to investments in companies engaged in electronic equipment and instruments, systems software, hardware, storage and peripherals and specialized consumer services, application software, healthcare technology, internet software and services, data processing and outsourced services, internet retail, human resources and employment services, biotechnology, healthcare equipment and education services. It invests in senior secured loans between $10 million and $75 million.