Portman Ridge Finance (NASDAQ:BCIC – Get Free Report) and Runway Growth Finance (NASDAQ:RWAY – Get Free Report) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, valuation, analyst recommendations, profitability and earnings.
Risk & Volatility
Portman Ridge Finance has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, Runway Growth Finance has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.
Analyst Recommendations
This is a summary of recent recommendations and price targets for Portman Ridge Finance and Runway Growth Finance, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Portman Ridge Finance | 1 | 4 | 0 | 0 | 1.80 |
| Runway Growth Finance | 2 | 3 | 2 | 0 | 2.00 |
Earnings and Valuation
This table compares Portman Ridge Finance 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 | |
| Portman Ridge Finance | $61.15 million | 1.44 | $11.49 million | ($0.55) | -12.93 |
| Runway Growth Finance | $137.33 million | 2.04 | $34.05 million | $0.11 | 60.82 |
Runway Growth Finance has higher revenue and earnings than Portman Ridge Finance. Portman Ridge Finance is trading at a lower price-to-earnings ratio than Runway Growth Finance, indicating that it is currently the more affordable of the two stocks.
Dividends
Portman Ridge Finance pays an annual dividend of $1.08 per share and has a dividend yield of 15.2%. Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 19.7%. Portman Ridge Finance pays out -196.4% of its earnings in the form of a dividend. Runway Growth Finance pays out 1,200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Profitability
This table compares Portman Ridge Finance and Runway Growth Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Portman Ridge Finance | -5.72% | 14.09% | 5.44% |
| Runway Growth Finance | 5.82% | 11.73% | 5.55% |
Insider & Institutional Ownership
30.1% of Portman Ridge Finance shares are owned by institutional investors. Comparatively, 64.6% of Runway Growth Finance shares are owned by institutional investors. 1.3% of Portman Ridge Finance shares are owned by insiders. Comparatively, 1.0% of Runway Growth Finance shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Summary
Runway Growth Finance beats Portman Ridge Finance on 12 of the 16 factors compared between the two stocks.
About Portman Ridge Finance
Portman Ridge Finance Corporation is a business development company specializing in investments in unitranche loans (including last out), first lien loans, second lien loans, subordinated debt, equity co-investment, buyout in middle market companies. It also makes acquisitions in businesses complementary to the firm’s business. It primarily invests in healthcare, cargo transport, manufacturing, industrial & environmental services, logistics & distribution, media & telecommunications, real estate, education, automotive, agriculture, aerospace/defense, packaging, electronics, finance, non-durable consumer, consumer products, business services, utilities, insurance, and food and beverage sectors. The fund typically invests $1 million to $20 million in its portfolio companies. It provides senior secured term loans from $2 million to $20 million maturing in five to seven years; second lien term loans from $5 million to $15 million maturing in six to eight years; senior unsecured loans $5 million to $23 million maturing in six to eight years; mezzanine loans from $5 million to $15 million maturing in seven to ten years; and equity investments from $1 to $5 million. The fund targets the companies with EBITDA between $5 million and $25 million. While investing in debt securities, it invests in those middle market firms with EBITDA between $10 million and $50 million and/or total debt between $25 million and $150 million. It invests in minority, and majority or control equity positions alongside its private equity sponsor partners.
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.
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