Comparing Runway Growth Finance (NASDAQ:RWAY) and Goldman Sachs BDC (NYSE:GSBD)

Goldman Sachs BDC (NYSE:GSBD) and Runway Growth Finance (NASDAQ:RWAY) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Volatility and Risk

Goldman Sachs BDC has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Runway Growth Finance has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500.

Dividends

Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 14.2%. Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 19.2%. Goldman Sachs BDC pays out 123.1% 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 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.

Institutional & Insider Ownership

28.7% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 64.6% of Runway Growth Finance shares are owned by institutional investors. 0.1% of Goldman Sachs 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 company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Goldman Sachs BDC	32.62%	12.23%	5.31%
Runway Growth Finance	24.79%	11.52%	5.69%

Earnings & Valuation

This table compares Goldman Sachs 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
Goldman Sachs BDC	$365.57 million	2.78	$119.27 million	$1.04	8.69
Runway Growth Finance	$137.33 million	1.81	$34.05 million	$0.92	7.49

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Goldman Sachs BDC and Runway Growth Finance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Goldman Sachs BDC	1	5	0	0	1.83
Runway Growth Finance	1	4	2	0	2.14

Goldman Sachs BDC presently has a consensus price target of $9.50, suggesting a potential upside of 5.15%. Runway Growth Finance has a consensus price target of $9.00, suggesting a potential upside of 30.62%. Given Runway Growth Finance’s stronger consensus rating and higher possible upside, analysts plainly believe Runway Growth Finance is more favorable than Goldman Sachs BDC.

About Goldman Sachs BDC

Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies. It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities. The fund primarily invests in United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.

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.