Runway Growth Finance Corp. (RWAY) beats earnings estimates for Q3

Runway Growth Finance Corp. (RWAY) came out with quarterly earnings of $0.36 per share, beating Zacks consensus estimate of $0.35 per share. That compares to earnings of $0.32 per share a year ago. These figures are adjusted for one-off effects.

This quarterly report represents an earnings surprise of 2.86%. A quarter ago, this company was expected to report earnings of $0.32 per share when it actually posted earnings of $0.35, which delivered a surprise of 9.38%.

In the past four quarters, the company has beaten consensus EPS estimates four times.

Runway Growth Finance Corp., which belongs to the Zacks Financial – SBIC & Commercial Industry industry, reported revenue of $27.33 million for the quarter ended September 2022, missing Zacks’ consensus estimate by 1.77%. This compares to annual sales of $18.61 million. The company has beaten consensus sales estimates twice in the past four quarters.

The sustainability of the immediate price action of the stock based on recently released numbers and future earnings expectations will depend primarily on management’s comments on the earnings release.

Runway Growth Finance Corp. shares are up about 1.3% year-to-date, while the S&P 500 is down -21.1%.

What’s next for Runway Growth Finance Corp.

While Runway Growth Finance Corp. has outperformed the market so far this year, investors are left with the question: What’s next for the stock?

There are no easy answers to this key question, but one reliable metric that can help investors answer this question is the company’s earnings prospects. This includes not only the current consensus earnings expectations for the quarter(s) ahead, but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track such revisions themselves or rely on a trusted rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this earnings release, the trend in estimate revisions for Runway Growth Finance Corp. mixed. While the magnitude and direction of the estimate revisions could change following the company’s just-released earnings report, the current status puts the stock at a Zacks #3 rank (Hold). The shares are therefore expected to perform in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the coming quarters and the current fiscal year change over the coming days. Current consensus EPS estimate is $0.38 on revenue of $32.65 million for the upcoming quarter and $1.39 on revenue of $104.89 million for the current fiscal year.

Investors should keep in mind that the outlook for the industry can also have a material impact on the stock’s performance. In terms of Zacks Industry Rank, Financial – SBIC & Commercial Industry is currently ranked in the top 29% of Zacks 250+ Industries. Our research shows that the top 50% of industries evaluated by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Barings BDC (BBDC) is yet to report results for the quarter ended September 2022. The results are expected to be released on November 10th.

This business development company is expected to report quarterly earnings of $0.25 per share in its upcoming report, a +8.7% year-over-year change. The consensus EPS estimate for the quarter has been flat for the last 30 days.

Barings BDC revenue is expected to be $58.43 million, up 67% from the same quarter last year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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