TPG has had an impressive run over the past six months as its shares have beaten the S&P 500 by 9.7%. The stock now trades at $65.73, marking a 21.2% gain. This run-up might have investors contemplating their next move.
Following the strength, is TPG a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Is TPG a Good Business?
Founded in 1992 and managing over 300 active portfolio companies across more than 30 countries, TPG (NASDAQ: TPG) is a global alternative asset management firm that invests across private equity, credit, real estate, and public market strategies.
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
Thankfully, TPG’s 21.7% annualized revenue growth over the last five years was exceptional. Its growth beat the average financials company and shows its offerings resonate with customers.
2. Fee-Related Earnings Jumped Higher
Topline performance tells part of the story, but sustainable profitability is the real measure of success. In the asset management space, fee-related earnings isolate the consistent profits from ongoing fee-based operations, filtering out the volatility of performance fees and investment income. This gives us a clear view of the company’s recurring earnings potential.
TPG’s annual fee-related earnings growth over the last four years was 23.4%, a top-notch result.
3. EPS Surges Higher Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
TPG’s astounding 28.3% annual EPS growth over the last two years aligns with its revenue trend. This tells us it maintained its per-share profitability as it expanded.
Final Judgment
These are just a few reasons why we think TPG is a high-quality business, and with its shares outperforming the market lately, the stock trades at 23.5× forward P/E (or $65.73 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More Than TPG
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