Analyzing Barings Bdc (NYSE:BBDC) & Runway Growth Finance (NASDAQ:RWAY)

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

Earnings and Valuation

This table compares Runway Growth Finance and Barings Bdc”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Runway Growth Finance	$137.33 million	1.64	$34.05 million	($0.09)	-58.94
Barings Bdc	$101.66 million	8.64	$101.92 million	$0.85	9.87

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

Insider and Institutional Ownership

64.6% of Runway Growth Finance shares are owned by institutional investors. Comparatively, 44.1% of Barings Bdc shares are owned by institutional investors. 1.0% of Runway Growth Finance shares are owned by company insiders. Comparatively, 0.6% of Barings Bdc shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Runway Growth Finance and Barings Bdc, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Runway Growth Finance	2	4	2	0	2.00
Barings Bdc	0	3	1	1	2.60

Runway Growth Finance presently has a consensus price target of $8.20, suggesting a potential upside of 54.57%. Barings Bdc has a consensus price target of $9.50, suggesting a potential upside of 13.27%. Given Runway Growth Finance’s higher probable upside, research analysts plainly believe Runway Growth Finance is more favorable than Barings Bdc.

Risk & Volatility

Runway Growth Finance has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, Barings Bdc has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.

Profitability

This table compares Runway Growth Finance and Barings Bdc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Runway Growth Finance	-2.00%	10.87%	5.37%
Barings Bdc	32.45%	10.08%	4.33%

Dividends

Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 24.9%. Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 12.4%. Runway Growth Finance pays out -1,466.7% of its earnings in the form of a dividend. Barings Bdc pays out 122.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has raised its dividend for 3 consecutive years. Runway Growth Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Runway Growth Finance beats Barings Bdc on 10 of the 18 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 Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.