Runway Growth Finance Corp (RWAY) AI Stock Analysis

• Market Cap: $379.91M
• Dividend Yield: 10.58%
• Average Volume (3M): 246.77K
• Price to Earnings (P/E): 5.5
• Beta (1Y): 0.53
• Revenue Growth: 1.85%
• EPS Growth: 151.90%
• Country: US
• Employees: N/A
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Credit Services
• EPS (TTM): 0.38
• Shares Outstanding: 36,216,633
• 10 Day Avg. Volume: 229,114
• 30 Day Avg. Volume: 246,772
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 2.39
• Enterprise Value/Revenue: 5.49
• Enterprise Value/Gross Profit: 7.49
• Enterprise Value/Ebitda: 8.28
• 1Y Price Target: $11.50
• Price Target Upside: 8.59% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 63 Neutral
• Price Target: ―

Runway Growth Finance Corp faces significant financial performance challenges with declining revenue and negative net income, which are partially offset by a strong balance sheet with no debt. Technical indicators suggest bearish momentum, though the valuation is attractive with a low P/E ratio and high dividend yield. The earnings call provided a mixed outlook with strategic positives but financial concerns, leading to an overall score of 63.

Positive Factors

Strong Balance Sheet

A strong balance sheet with no debt reduces financial risk and provides stability, allowing the company to focus on strategic growth initiatives.

Strategic Acquisitions

The acquisition by BC Partners Credit enhances origination channels and expands product offerings, potentially increasing revenue opportunities.

Board Expansion

Expanding the Board with experienced directors strengthens governance and strategic oversight, supporting long-term business objectives.

Negative Factors

Declining Revenue

Declining revenue indicates challenges in maintaining growth, which can impact profitability and limit future investment in business expansion.

Negative Net Income

Negative net income affects the company's ability to generate returns for shareholders and may hinder reinvestment in growth opportunities.

Decreased Cash Flow

Reduced cash generation capability can limit operational flexibility and the ability to fund new investments or manage unexpected expenses.

Runway Growth Finance Corp Business Overview & Revenue Model

Company Description

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.

How the Company Makes Money

Runway Growth Finance Corp generates revenue primarily through the interest income earned on its portfolio of senior secured loans. The company extends these loans to high-growth companies, typically with venture capital backing, across various sectors such as technology and life sciences. Interest payments on the principal amount of the loans represent the main source of revenue. Additionally, Runway Growth Finance may earn fees on the origination of loans and other related financial services. The company's earnings are influenced by the quality of its loan portfolio, interest rate environments, and its ability to identify and partner with suitable high-growth companies. Strong relationships with venture capital firms and other financial institutions also play a critical role in identifying potential lending opportunities, thereby contributing to the company's revenue streams.

Runway Growth Finance Corp Financial Statement Overview

Summary

Runway Growth Finance Corp is encountering profitability and cash flow challenges, with declining revenue and negative net income impacting financial performance. Despite a strong balance sheet with no debt, the company must focus on enhancing revenue streams and profitability to improve overall financial health.

Income Statement

The company has shown a decline in revenue from $145.8M to $144.6M, indicating a slight negative revenue growth. However, the gross profit margin has improved from 75.5% to 100% due to the entire revenue being recognized as gross profit, which might be due to accounting classifications. EBIT margin decreased from 60% to 44.1%, and net income turned negative, impacting net profit margin adversely. The overall profitability trajectory is concerning due to declining EBIT and negative net income.

Balance Sheet

Runway Growth Finance showcases a strong equity position with an equity ratio of 47.2%. The debt-to-equity ratio improved significantly with no debt in the latest year, reducing financial risk. However, the return on equity dropped to zero due to the lack of net income, highlighting challenges in generating returns for shareholders.

Cash Flow

Operating cash flow decreased from $112.4M to $69.8M, which is a significant drop, indicating reduced cash generation capability. Free cash flow is positive but has decreased from the prior year. The operating cash flow to net income ratio is undefined due to zero net income, and reliance on operating cash flow is evident to maintain free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	165.56M	141.69M	145.82M	106.69M	75.53M	52.28M
Gross Profit	121.17M	144.63M	110.06M	81.63M	71.09M	37.67M
EBITDA	109.74M	73.61M	-33.93M	49.01M	45.62M	48.78M
Net Income	68.87M	73.61M	44.34M	32.25M	45.62M	46.98M
Balance Sheet
Total Assets	1.04B	1.09B	1.08B	1.14B	738.35M	639.89M
Cash, Cash Equivalents and Short-Term Investments	5.96M	5.75M	44.97M	5.76M	4.70M	14.89M
Total Debt	515.95M	552.33M	510.08M	548.96M	79.49M	167.07M
Total Liabilities	542.38M	576.49M	532.08M	565.71M	132.15M	173.65M
Stockholders Equity	498.87M	514.87M	547.07M	576.05M	606.19M	466.24M
Cash Flow
Free Cash Flow	49.75M	69.76M	112.44M	-359.85M	-61.25M	-106.09M
Operating Cash Flow	49.75M	69.76M	112.44M	-359.85M	-61.25M	-106.09M
Investing Cash Flow	53.83M	0.00	95.94M	-453.82M	-120.84M	168.61M
Financing Cash Flow	-115.92M	-66.98M	-115.23M	360.91M	51.06M	75.18M

Runway Growth Finance Corp Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 10.59
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RWAY, the sentiment is Neutral. The current price of 10.59 is below the 20-day moving average (MA) of 10.67, below the 50-day MA of 10.61, and above the 200-day MA of 9.86, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 42.98 is Neutral, neither overbought nor oversold. The STOCH value of 13.43 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RWAY.

Runway Growth Finance Corp Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FINV	79 Outperform	$1.94B	5.17	18.75%	3.59%	8.41%	34.76%
OMF	76 Outperform	$7.22B	10.98	20.47%	6.85%	9.41%	13.98%
YRD	73 Outperform	$497.70M	2.81	13.64%	6.77%	12.69%	-35.36%
BBDC	70 Outperform	$993.75M	9.97	8.41%	12.58%	-12.90%	-9.85%
Sector *	68 Neutral	$18.10B	11.52	9.93%	3.73%	9.70%	1.14%
AGM	66 Neutral	$2.09B	11.59	13.85%	2.95%	26.87%	3.35%
RWAY	63 Neutral	$379.91M	5.50	14.31%	10.58%	1.85%	151.90%

Runway Growth Finance Corp Corporate Events

Runway Growth Finance Expands Board with New Directors

Runway Growth Finance Corp., a Maryland corporation, announced changes to its Board of Directors on March 13, 2025. John Engel resigned as a director, effective March 21, 2025, with no disagreements with the company. Jennifer Kwon Chou was elected as an independent director, along with Robert Warshauer, Alexander Duka, and Ted Goldthorpe, who will also serve as the chair of the Board. These appointments, effective March 21, 2025, are part of the Board’s expansion from five to eight directors, enhancing the company’s strategic and governance capabilities.