Rand Capital (NASDAQ:RAND – Get Free Report) and Runway Growth Finance (NASDAQ:RWAY – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.
Risk & Volatility
Rand Capital has a beta of 0.31, suggesting that its share price is 69% 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.
Analyst Recommendations
This is a breakdown of current ratings and target prices for Rand Capital and Runway Growth Finance, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Rand Capital | 1 | 0 | 0 | 0 | 1.00 |
| Runway Growth Finance | 0 | 4 | 3 | 0 | 2.43 |
Insider and Institutional Ownership
64.6% of Runway Growth Finance shares are held by institutional investors. 68.2% of Rand Capital shares are held by insiders. Comparatively, 1.0% of Runway Growth Finance shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Profitability
This table compares Rand Capital and Runway Growth Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Rand Capital | -164.74% | 7.12% | 6.80% |
| Runway Growth Finance | 38.92% | 11.94% | 5.80% |
Dividends
Rand Capital pays an annual dividend of $1.16 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 14.8%. Rand Capital pays out -27.6% of its earnings in the form of a dividend. 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.
Valuation and Earnings
This table compares Rand Capital and Runway Growth Finance”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Rand Capital | $8.56 million | 3.87 | $8.83 million | ($4.20) | -2.66 |
| Runway Growth Finance | $144.63 million | 2.23 | $73.61 million | $1.47 | 6.07 |
Runway Growth Finance has higher revenue and earnings than Rand Capital. Rand Capital 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.
Summary
Runway Growth Finance beats Rand Capital on 12 of the 16 factors compared between the two stocks.
About Rand Capital
Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.
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.
Receive News & Ratings for Rand Capital Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Rand Capital and related companies with MarketBeat.com's FREE daily email newsletter.
