MarketAxess (NASDAQ:MKTX) versus Runway Growth Finance (NASDAQ:RWAY) Critical Review

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
MarketAxess	35.22%	22.48%	12.84%
Runway Growth Finance	5.82%	11.73%	5.55%

Risk and Volatility

MarketAxess has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500. Comparatively, Runway Growth Finance has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Institutional & Insider Ownership

99.0% of MarketAxess shares are owned by institutional investors. Comparatively, 64.6% of Runway Growth Finance shares are owned by institutional investors. 0.7% of MarketAxess shares are owned by insiders. Comparatively, 1.0% of Runway Growth Finance shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares MarketAxess and Runway Growth Finance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MarketAxess	$870.02 million	6.62	$246.63 million	$8.48	19.31
Runway Growth Finance	$137.33 million	2.05	$34.05 million	$0.11	60.98

MarketAxess has higher revenue and earnings than Runway Growth Finance. MarketAxess 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

MarketAxess pays an annual dividend of $3.12 per share and has a dividend yield of 1.9%. Runway Growth Finance pays an annual dividend of $1.32 per share and has a dividend yield of 19.7%. MarketAxess pays out 36.8% 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. MarketAxess has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and target prices for MarketAxess and Runway Growth Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MarketAxess	0	12	1	0	2.08
Runway Growth Finance	2	3	2	0	2.00

MarketAxess presently has a consensus price target of $156.10, suggesting a potential downside of 4.67%. Runway Growth Finance has a consensus price target of $8.40, suggesting a potential upside of 25.22%. Given Runway Growth Finance’s higher possible upside, analysts clearly believe Runway Growth Finance is more favorable than MarketAxess.

Summary

MarketAxess beats Runway Growth Finance on 12 of the 17 factors compared between the two stocks.

About MarketAxess

MarketAxess Holdings Inc., together with its subsidiaries, operates an electronic trading platform for institutional investor and broker-dealer companies worldwide. The company offers trading technology that provides liquidity access in U.S. high-grade bonds, U.S. high-yield bonds, emerging market debt, eurobonds, municipal bonds, U.S. government bonds, and other fixed-income securities; and executes bond trades between and among institutional investor and broker-dealer clients in an all-to-all anonymous trading environment for corporate bonds through its Open Trading protocols. It also provides trading-related products and services, including composite+ pricing and other market data products to assist clients with trading decisions; auto-execution and other execution services for clients requiring specialized workflow solutions; connectivity solutions that facilitate straight-through processing; and technology services to optimize trading environments. In addition, the company offers various pre-and post-trade services, such as trade matching, trade publication, regulatory transaction reporting, and market and reference data across a range of fixed-income and other products. MarketAxess Holdings Inc. was incorporated in 2000 and is headquartered in New York, New York.

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.