Contrasting Palmer Square Capital BDC (NYSE:PSBD) and Runway Growth Finance (NASDAQ:RWAY)

Palmer Square Capital BDC (NYSE:PSBD) 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 analyst recommendations, profitability, valuation, institutional ownership, earnings, dividends and risk.

Dividends

Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 12.0%. Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 14.8%. Palmer Square Capital BDC pays out 334.9% 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 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. Runway Growth Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and price targets for Palmer Square Capital BDC and Runway Growth Finance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Palmer Square Capital BDC	0	4	0	0	2.00
Runway Growth Finance	0	4	3	0	2.43

Palmer Square Capital BDC currently has a consensus price target of $13.00, indicating a potential upside of 8.68%. Runway Growth Finance has a consensus price target of $11.10, indicating a potential upside of 24.72%. Given Runway Growth Finance’s stronger consensus rating and higher possible upside, analysts clearly believe Runway Growth Finance is more favorable than Palmer Square Capital BDC.

Institutional & Insider Ownership

6.5% of Palmer Square Capital BDC shares are held by institutional investors. Comparatively, 64.6% of Runway Growth Finance shares are held by institutional investors. 1.1% of Palmer Square Capital BDC shares are held by company insiders. Comparatively, 1.0% of Runway Growth Finance shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Palmer Square Capital BDC has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Runway Growth Finance has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.

Profitability

This table compares Palmer Square Capital BDC and Runway Growth Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Palmer Square Capital BDC	10.85%	10.77%	4.10%
Runway Growth Finance	38.92%	11.94%	5.80%

Valuation and Earnings

This table compares Palmer Square Capital BDC and Runway Growth Finance”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Palmer Square Capital BDC	$18.74 million	20.09	$47.67 million	$0.43	27.82
Runway Growth Finance	$144.63 million	2.22	$73.61 million	$1.47	6.05

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

Summary

Runway Growth Finance beats Palmer Square Capital BDC on 12 of the 16 factors compared between the two stocks.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.

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.