TPG (TPG) AI Stock Analysis

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TPG

(NASDAQ:TPG)

62Neutral

TPG exhibits strong strategic growth and operational efficiencies, bolstered by a robust balance sheet. However, profitability challenges and cash flow fluctuations are significant concerns. Despite positive earnings call highlights and improved corporate governance, the stock faces technical pressure with downward price trends and valuation concerns due to a negative P/E ratio.

Positive Factors

Acquisitions

The recent acquisition of Angelo Gordon enhances TPG's ability to penetrate private credit and infrastructure growth opportunities.

Earnings

Q4/24 results above expectations with $0.62 in after-tax distributable earnings per share.

Growth Potential

TPG has a strong growth potential with expectations to double its assets under management to $500 billion through a combination of organic and inorganic strategies.

Negative Factors

Market Performance

TPG shares underperformed the general market, with shortfalls mainly involving decreases for management fees and fee AUM below consensus.

Revenue Guidance

Fee revenue noisy near-term. TPG guided 4Q fee revenue estimates down but also forecast a significant pick-up in 2025.

Valuation

TPG's valuation fully reflects favorable expectations, indicating balanced risk-reward on the stock.

TPG (TPG) vs. S&P 500 (SPY)

Market Cap

$15.37B

Dividend Yield4.38%

Average Volume (3M)1.89M

Price to Earnings (P/E)―

Beta (1Y)1.66

Revenue Growth46.69%

EPS Growth-98.56%

CountryUS

Employees1,900

SectorFinancial

Sector Strength79

IndustryAsset Management

Share Statistics

EPS (TTM)-0.42

Shares Outstanding107,108,200

10 Day Avg. Volume2,145,229

30 Day Avg. Volume1,886,998

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)5.42

Price to Cash Flow (P/CF)67.00

P/FCF Ratio81.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$62.18

Price Target Upside56.70% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering11

TPG Business Overview & Revenue Model

Company DescriptionTPG is a leading global alternative asset management firm with a focus on private equity, growth equity, real estate, credit, and public equity. The company operates across multiple sectors, including healthcare, technology, consumer products, and financial services, offering a range of investment strategies to its clients. TPG is known for its active management approach and its ability to create value through strategic investments and operational improvements.

How the Company Makes MoneyTPG makes money primarily through managing private investment funds and earning fees from investors. The company's revenue streams include management fees, which are a percentage of the total assets under management, and performance fees, which are earned when the investment returns exceed a predetermined benchmark. TPG also generates income from strategic partnerships and co-investments with institutional investors, enhancing its ability to deploy capital effectively across diverse sectors. Additionally, the firm earns returns from its direct investments and successful exits, including the sale of portfolio companies or assets.

TPG Financial Statement Overview

Summary

TPG exhibits strong operational efficiencies and a robust balance sheet with no debt. However, profitability issues and cash flow fluctuations present challenges. The mixed financial performance is underscored by a negative net profit margin despite positive free cash flow.

Income Statement

Neutral

TPG's revenue growth has been inconsistent, with a notable increase in 2024 compared to 2023. However, the net profit margin is negative due to a net loss in 2024, indicating challenges in profitability. The EBIT margin improved significantly in 2024, reflecting better operational efficiency despite previous losses.

Balance Sheet

Positive

TPG has a strong equity base with a debt-to-equity ratio of 0, indicating no reliance on debt financing in 2024. The equity ratio is moderate, reflecting a stable financial position. However, fluctuations in stockholders' equity over the years suggest potential volatility.

Cash Flow

Positive

The free cash flow was positive in 2024, showcasing good cash generation ability. The operating cash flow is strong compared to net income, which is a positive indicator. However, the decline in free cash flow growth in 2024 compared to previous periods points to some challenges in maintaining cash flow momentum.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.50B	1.82B	1.90B	5.56B	2.25B
	Gross Profit
3.50B	-524.10M	-92.23M	4.62B	2.21B
	EBIT
0.00	-434.01M	146.52M	2.03B	937.36M
	EBITDA
198.07M	0.00	179.51M	0.00	1.11B
	Net Income Common Stockholders
23.48M	80.09M	-56.23M	4.66B	1.44B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
808.02M	678.37M	1.11B	978.10M	861.92M
	Total Assets
10.54B	9.37B	7.94B	8.96B	7.00B
	Total Debt
0.00	1.26B	444.57M	621.45M	490.63M
	Net Debt
-808.02M	585.55M	-668.01M	-356.65M	-371.30M
	Total Liabilities
6.94B	6.01B	4.86B	1.70B	1.48B
	Stockholders Equity
3.59B	579.16M	509.67M	1.61B	2.46B
Cash Flow		Free Cash Flow
504.01M	703.79M	1.37B	1.47B	-20.16M
	Operating Cash Flow
532.15M	720.52M	1.38B	1.47B	95.39M
	Investing Cash Flow
-44.47M	-373.56M	-3.01M	-37.74M	-108.10M
	Financing Cash Flow
-344.86M	-789.23M	-1.24B	-1.32B	250.33M

TPG Technical Analysis

Technical Analysis Sentiment

Negative

Last Price39.68

Price Trends

50DMA

53.50

Negative

100DMA

59.83

Negative

200DMA

56.18

Negative

Market Momentum

MACD

-1.89

Negative

RSI

37.30

Neutral

STOCH

20.82

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TPG, the sentiment is Negative. The current price of 39.68 is below the 20-day moving average (MA) of 47.62, below the 50-day MA of 53.50, and below the 200-day MA of 56.18, indicating a bearish trend. The MACD of -1.89 indicates Negative momentum. The RSI at 37.30 is Neutral, neither overbought nor oversold. The STOCH value of 20.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TPG.

TPG Risk Analysis

TPG disclosed 74 risk factors in its most recent earnings report. TPG reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

TPG Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCC	75 Outperform	$13.22B	7.92	12.40%	10.15%	19.95%	-10.57%
NTRS	68 Neutral	$16.67B	8.75	16.32%	3.51%	29.42%	92.95%
CG	67 Neutral	$13.34B	13.32	18.90%	3.95%	62.87%	―
CRBG	64 Neutral	$14.17B	6.85	19.20%	3.65%	1.72%	126.74%
Sector *	64 Neutral	$13.44B	9.41	9.19%	4.92%	16.30%	-8.66%
TPG	62 Neutral	$15.37B	―	0.05%	4.38%	46.69%	-98.56%
STEP	55 Neutral	$5.65B	103.13	-26.81%	2.19%	118.79%	-285.61%

* Financial Sector Average

Performance Comparison

TPG

45.87

2.58

5.96%

Carlyle Group

39.56

-5.98

-13.13%

NTRS

Northern

93.27

10.57

12.78%

ARCC

Ares Capital

20.86

2.24

12.03%

STEP

StepStone Group

48.74

14.47

42.22%

CRBG

Corebridge Financial, Inc.

28.86

2.35

8.86%

TPG Earnings Call Summary

Earnings Call Date: Feb 11, 2025 | % Change Since: -35.80% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Positive

The earnings call highlighted TPG's significant achievements in fundraising, investment performance, and strategic growth initiatives, particularly in climate and infrastructure. However, there were challenges with fee-earning AUM growth and delayed fee activation for new funds. Overall, the positive aspects and strategic progress outweigh the challenges.

Highlights

Record Fundraising Achievement

TPG exceeded its fundraising targets by raising $30 billion in 2024, a 54% increase from 2023 on a pro forma basis.

Strong Investment Performance

TPG's private equity portfolio appreciated more than 3% in the fourth quarter and 10% over the last twelve months, with revenue growth of approximately 16% over the last twelve months.

Successful Integration and Growth Post-Acquisition

Successfully integrated the acquisition of Angelo Gordon, realizing revenue synergies and opportunities for business growth as one fully integrated firm.

Strong Deployment and Realization Activities

TPG deployed $33 billion and realized $23 billion across the firm in 2024, with realizations increasing 50% from 2023 on a pro forma basis.

Expansion into Infrastructure and Climate Strategies

Launched the RISE Climate Transition Infrastructure Fund with $2 billion in anchor commitments and expanded the RISE Climate franchise into new asset classes.

Increased Capital Markets Revenue

Reported step-function growth in capital markets revenue in 2024, driven by expanded product expertise and integration of the broker-dealer across platforms.

Lowlights

Fee-Earning AUM Growth Challenges

Fee-earning AUM of $141 billion at the end of 2024 grew only approximately 3% versus year-end 2023 due to timing-related factors.

Delay in Fee Activation for New Funds

The fee base in the first RISE Climate Fund stepped down to actively invested capital with delayed activations affecting management fee growth.

Impact of Market Conditions on Fundraising

Some elongation in fundraising cycles due to market conditions, impacting the timing of capital inflows.

Company Guidance

During TPG's fourth-quarter 2024 earnings call, the company provided comprehensive guidance for the upcoming year, highlighting several key financial metrics and strategic priorities. TPG reported GAAP net income of $13 million and after-tax distributable earnings of $261 million, equating to $0.62 per Class A common stock. The firm declared a dividend of $0.53 per share, payable on March 7, 2025. TPG raised $30 billion in 2024, a 54% increase from the previous year, and deployed $33 billion while realizing $23 billion across the firm. For 2025, TPG aims to raise significantly more capital, with plans to expand its client relationships, particularly in private wealth, and to launch a new evergreen private equity vehicle. The company is targeting assets under management (AUM) growth, aspiring to double its current AUM of nearly $250 billion in the coming years. The focus will be on growing core strategies, driving organic innovation, pursuing inorganic acquisitions, enhancing private wealth penetration, and expanding insurance partnerships.

TPG Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

TPG Strengthens Board with New Independent Director

Positive

Jan 15, 2025

On January 15, 2025, TPG Inc. appointed Kathy Elsesser as an independent director as part of its strategic transition to a majority independent board. Elsesser, who brings over three decades of experience from Goldman Sachs, will serve on the Audit and Compensation Committees, enhancing TPG’s corporate governance and positioning as a leader in the alternative asset management industry.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.