Runway Growth Finance (NASDAQ:RWAY – Get Free Report) and Trinity Capital (NASDAQ:TRIN – 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.
Profitability
This table compares Runway Growth Finance and Trinity Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Runway Growth Finance | 24.79% | 11.52% | 5.69% |
| Trinity Capital | 46.18% | 14.97% | 6.68% |
Risk & Volatility
Runway Growth Finance has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Trinity Capital has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Runway Growth Finance | 1 | 4 | 3 | 0 | 2.25 |
| Trinity Capital | 1 | 1 | 5 | 1 | 2.75 |
Runway Growth Finance currently has a consensus target price of $9.60, indicating a potential upside of 45.45%. Trinity Capital has a consensus target price of $16.29, indicating a potential upside of 13.97%. Given Runway Growth Finance’s higher possible upside, research analysts clearly believe Runway Growth Finance is more favorable than Trinity Capital.
Insider and Institutional Ownership
64.6% of Runway Growth Finance shares are held by institutional investors. Comparatively, 24.6% of Trinity Capital shares are held by institutional investors. 1.0% of Runway Growth Finance shares are held by insiders. Comparatively, 5.3% of Trinity Capital 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.
Valuation and Earnings
This table compares Runway Growth Finance and Trinity Capital”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Runway Growth Finance | $137.33 million | 1.74 | $34.05 million | $0.92 | 7.17 |
| Trinity Capital | $293.65 million | 4.05 | $135.60 million | $1.96 | 7.29 |
Trinity Capital has higher revenue and earnings than Runway Growth Finance. Runway Growth Finance is trading at a lower price-to-earnings ratio than Trinity Capital, 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 20.0%. Trinity Capital pays an annual dividend of $2.04 per share and has a dividend yield of 14.3%. 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. Trinity Capital pays out 104.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Trinity Capital has raised its dividend for 1 consecutive years.
Summary
Trinity Capital beats Runway Growth Finance on 14 of the 18 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 Trinity Capital
Trinity Capital Inc. is a business development company. It is a venture capital firm specializing in venture debt to growth stage companies looking for loans and/or equipment financing. Trinity Capital Inc. was founded in 2019 is based in Phoenix, Arizona with additional offices in the United States.
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