Runway Growth Finance (NASDAQ:RWAY) versus Nuveen Churchill Direct Lending (NYSE:NCDL) Critical Survey

Runway Growth Finance (NASDAQ:RWAY) and Nuveen Churchill Direct Lending (NYSE:NCDL) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Risk and Volatility

Runway Growth Finance has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, Nuveen Churchill Direct Lending has a beta of 0.35, suggesting that its stock price is 65% less volatile than the S&P 500.

Institutional & Insider Ownership

64.6% of Runway Growth Finance shares are owned by institutional investors. 1.0% of Runway Growth Finance shares are owned by insiders. Comparatively, 0.6% of Nuveen Churchill Direct Lending shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Runway Growth Finance and Nuveen Churchill Direct Lending”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	$144.63 million	2.29	$73.61 million	$1.47	6.24
Nuveen Churchill Direct Lending	$224.04 million	3.25	$116.32 million	$1.53	9.64

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

Dividends

Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 14.4%. Nuveen Churchill Direct Lending pays an annual dividend of $1.80 per share and has a dividend yield of 12.2%. 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. Nuveen Churchill Direct Lending pays out 117.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Runway Growth Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations for Runway Growth Finance and Nuveen Churchill Direct Lending, 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
Nuveen Churchill Direct Lending	1	3	1	0	2.00

Runway Growth Finance currently has a consensus target price of $11.10, indicating a potential upside of 20.92%. Nuveen Churchill Direct Lending has a consensus target price of $15.75, indicating a potential upside of 6.82%. Given Runway Growth Finance’s stronger consensus rating and higher possible upside, analysts plainly believe Runway Growth Finance is more favorable than Nuveen Churchill Direct Lending.

Profitability

This table compares Runway Growth Finance and Nuveen Churchill Direct Lending’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%
Nuveen Churchill Direct Lending	36.83%	11.13%	4.83%

Summary

Runway Growth Finance beats Nuveen Churchill Direct Lending on 11 of the 16 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 Nuveen Churchill Direct Lending

Nuveen Churchill Direct Lending Corp. is a specialty finance company focused primarily on investing in senior secured loans to private equity-owned U.S. middle market companies. It has elected to be regulated as a business development company. Nuveen Churchill Direct Lending Corp. is based in NEW YORK.