Reviewing Golub Capital BDC (NASDAQ:GBDC) and Runway Growth Finance (NASDAQ:RWAY)

Golub Capital BDC (NASDAQ:GBDC) and Runway Growth Finance (NASDAQ:RWAY) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, valuation, risk, institutional ownership, analyst recommendations, earnings and profitability.

Institutional & Insider Ownership

42.4% of Golub Capital BDC shares are owned by institutional investors. Comparatively, 64.6% of Runway Growth Finance shares are owned by institutional investors. 1.4% of Golub Capital 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, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Golub Capital BDC pays an annual dividend of $1.32 per share and has a dividend yield of 10.4%. Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 19.2%. 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. 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.

Volatility and Risk

Golub Capital BDC has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500. Comparatively, Runway Growth Finance has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Golub Capital BDC	38.57%	10.37%	4.58%
Runway Growth Finance	24.79%	11.52%	5.69%

Valuation and Earnings

This table compares Golub Capital BDC and Runway Growth Finance”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Golub Capital BDC	$870.78 million	3.84	$376.65 million	$1.25	10.16
Runway Growth Finance	$137.33 million	1.81	$34.05 million	$0.92	7.49

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

Analyst Ratings

This is a breakdown of recent ratings for Golub Capital BDC and Runway Growth Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Golub Capital BDC	0	1	3	1	3.00
Runway Growth Finance	1	4	2	0	2.14

Golub Capital BDC currently has a consensus price target of $14.38, suggesting a potential upside of 13.19%. Runway Growth Finance has a consensus price target of $9.00, suggesting a potential upside of 30.62%. Given Runway Growth Finance’s higher possible upside, analysts clearly believe Runway Growth Finance is more favorable than Golub Capital BDC.

Summary

Golub Capital BDC beats Runway Growth Finance on 11 of the 17 factors compared between the two stocks.

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.

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.