Franklin Resources (NYSE:BEN) and Runway Growth Finance (NASDAQ:RWAY) Critical Contrast

Runway Growth Finance (NASDAQ:RWAY) and Franklin Resources (NYSE:BEN) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.

Institutional & Insider Ownership

64.6% of Runway Growth Finance shares are held by institutional investors. Comparatively, 47.6% of Franklin Resources shares are held by institutional investors. 1.0% of Runway Growth Finance shares are held by company insiders. Comparatively, 23.4% of Franklin Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Runway Growth Finance and Franklin Resources”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	1.99	$34.05 million	$0.11	59.27
Franklin Resources	$8.77 billion	1.83	$524.90 million	$1.47	21.54

Franklin Resources has higher revenue and earnings than Runway Growth Finance. Franklin Resources 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

Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 20.2%. Franklin Resources pays an annual dividend of $1.32 per share and has a dividend yield of 4.2%. 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. Franklin Resources 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. Franklin Resources has increased its dividend for 45 consecutive years.

Volatility and Risk

Runway Growth Finance has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Franklin Resources has a beta of 1.54, suggesting that its share price is 54% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Runway Growth Finance and Franklin Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Runway Growth Finance	2	3	2	0	2.00
Franklin Resources	1	6	4	0	2.27

Runway Growth Finance currently has a consensus price target of $8.40, indicating a potential upside of 28.83%. Franklin Resources has a consensus price target of $35.89, indicating a potential upside of 13.36%. Given Runway Growth Finance’s higher possible upside, equities research analysts clearly believe Runway Growth Finance is more favorable than Franklin Resources.

Profitability

This table compares Runway Growth Finance and Franklin Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Runway Growth Finance	5.82%	11.73%	5.55%
Franklin Resources	8.72%	11.55%	4.46%

Summary

Franklin Resources beats Runway Growth Finance on 10 of the 17 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 Franklin Resources

Franklin Resources, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. It launches equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries. The firm invests in the public equity, fixed income, and alternative markets. Franklin Resources, Inc. was founded in 1947 and is based in San Mateo, California with an additional office in Calgary, Canada; Dubai, United Arab Emirates; Edinburgh, United Kingdom; Fort Lauderdale, United States; Hyderabad, India; London, United Kingdom; Rancho Cordova, United states; Shanghai, China; Singapore; Stamford, United States; and Vienna, Austria.