Financial Analysis: Investcorp Credit Management BDC (NASDAQ:ICMB) and Runway Growth Finance (NASDAQ:RWAY)

Runway Growth Finance (NASDAQ:RWAY) and Investcorp Credit Management BDC (NASDAQ:ICMB) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, risk, valuation, dividends, earnings and analyst recommendations.

Institutional & Insider Ownership

64.6% of Runway Growth Finance shares are owned by institutional investors. Comparatively, 7.8% of Investcorp Credit Management BDC shares are owned by institutional investors. 1.0% of Runway Growth Finance shares are owned by insiders. Comparatively, 1.3% of Investcorp Credit Management BDC shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Runway Growth Finance and Investcorp Credit Management BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Runway Growth Finance	38.92%	11.94%	5.80%
Investcorp Credit Management BDC	-0.30%	3.33%	1.19%

Dividends

Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 14.3%. Investcorp Credit Management BDC pays an annual dividend of $0.48 per share and has a dividend yield of 17.4%. 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. Investcorp Credit Management BDC pays out -4,800.0% of its earnings in the form of a dividend. Investcorp Credit Management BDC has increased its dividend for 1 consecutive years. Investcorp Credit Management BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Runway Growth Finance and Investcorp Credit Management BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Runway Growth Finance	0	4	3	0	2.43
Investcorp Credit Management BDC	1	0	0	0	1.00

Runway Growth Finance presently has a consensus price target of $11.10, indicating a potential upside of 19.87%. Given Runway Growth Finance’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Runway Growth Finance is more favorable than Investcorp Credit Management BDC.

Risk & Volatility

Runway Growth Finance has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Investcorp Credit Management BDC has a beta of 0.42, indicating that its share price is 58% less volatile than the S&P 500.

Earnings & Valuation

This table compares Runway Growth Finance and Investcorp Credit Management BDC”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Runway Growth Finance	$144.63 million	2.31	$73.61 million	$1.47	6.30
Investcorp Credit Management BDC	$23.88 million	1.67	-$144,200.00	($0.01)	-276.00

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

Summary

Runway Growth Finance beats Investcorp Credit Management BDC on 13 of the 17 factors compared between the two stocks.

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.

About Investcorp Credit Management BDC

Investcorp Credit Management BDC, Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, acquisitions, market/product expansion, organic growth, refinancings and recapitalization investments. It also selectively invests in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments, in most cases taking such upside participation interests as part of a broader investment relationship. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest between $5 million to $25 million in companies that have annual revenues of at least $50 million with EBITDA at least $15 million.