Runway Growth Finance (NASDAQ:RWAY – Get Free Report) and Golub Capital BDC (NASDAQ:GBDC – Get Free Report) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.
Earnings & Valuation
This table compares Runway Growth Finance and Golub Capital 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 | $137.33 million | 1.81 | $34.05 million | $0.92 | 7.49 |
| Golub Capital BDC | $870.78 million | 3.84 | $376.65 million | $1.25 | 10.16 |
Volatility and Risk
Runway Growth Finance has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500. Comparatively, Golub Capital BDC has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500.
Dividends
Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 19.2%. Golub Capital BDC pays an annual dividend of $1.32 per share and has a dividend yield of 10.4%. Runway Growth Finance pays out 143.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Golub Capital BDC pays out 105.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider and Institutional Ownership
64.6% of Runway Growth Finance shares are held by institutional investors. Comparatively, 42.4% of Golub Capital BDC shares are held by institutional investors. 1.0% of Runway Growth Finance shares are held by company insiders. Comparatively, 1.4% of Golub Capital BDC shares are held by company 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.
Analyst Ratings
This is a summary of current ratings and price targets for Runway Growth Finance and Golub Capital BDC, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Runway Growth Finance | 1 | 4 | 2 | 0 | 2.14 |
| Golub Capital BDC | 0 | 1 | 3 | 1 | 3.00 |
Runway Growth Finance presently has a consensus target price of $9.00, suggesting a potential upside of 30.62%. Golub Capital BDC has a consensus target price of $14.38, suggesting a potential upside of 13.19%. Given Runway Growth Finance’s higher possible upside, equities research analysts clearly believe Runway Growth Finance is more favorable than Golub Capital BDC.
Profitability
This table compares Runway Growth Finance and Golub Capital BDC’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Runway Growth Finance | 24.79% | 11.52% | 5.69% |
| Golub Capital BDC | 38.57% | 10.37% | 4.58% |
Summary
Golub Capital BDC beats Runway Growth Finance on 11 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 Golub Capital BDC
Golub Capital BDC, Inc. (GBDC) is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. It typically invests in diversified consumer services, automobiles, healthcare technology, insurance, health care equipment and supplies, hotels, restaurants and leisure, healthcare providers and services, IT services and specialty retails. It seeks to invest in the United States. It primarily invests in first lien traditional senior debt, first lien one stop, junior debt and equity, senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.
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