Analyzing Monroe Capital (NASDAQ:MRCC) and TPG (NASDAQ:TPG)

TPG (NASDAQ:TPG) and Monroe Capital (NASDAQ:MRCC) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, earnings, profitability and institutional ownership.

Institutional & Insider Ownership

94.0% of TPG shares are owned by institutional investors. 76.5% of TPG shares are owned by company insiders. Comparatively, 3.6% of Monroe Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares TPG and Monroe Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TPG	0.69%	23.45%	7.85%
Monroe Capital	20.97%	12.14%	4.75%

Valuation and Earnings

This table compares TPG and Monroe Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TPG	$2.47 billion	9.56	$80.09 million	($0.34)	-190.50
Monroe Capital	$18.11 million	9.74	$370,000.00	$0.60	13.57

TPG has higher revenue and earnings than Monroe Capital. TPG is trading at a lower price-to-earnings ratio than Monroe Capital, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings for TPG and Monroe Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TPG	0	7	6	0	2.46
Monroe Capital	1	0	1	0	2.00

TPG currently has a consensus price target of $63.00, suggesting a potential downside of 2.73%. Monroe Capital has a consensus price target of $8.13, suggesting a potential downside of 0.18%. Given Monroe Capital’s higher possible upside, analysts plainly believe Monroe Capital is more favorable than TPG.

Risk & Volatility

TPG has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500. Comparatively, Monroe Capital has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500.

Dividends

TPG pays an annual dividend of $1.52 per share and has a dividend yield of 2.3%. Monroe Capital pays an annual dividend of $1.00 per share and has a dividend yield of 12.3%. TPG pays out -447.1% of its earnings in the form of a dividend. Monroe Capital pays out 166.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

TPG beats Monroe Capital on 10 of the 16 factors compared between the two stocks.

About TPG

TPG Inc. operates as an alternative asset manager in the United States and internationally. The company offers investment management services to TPG Funds, limited partners, and other vehicles. It also offers monitoring services to portfolio companies; advisory, debt and equity arrangement, and underwriting and placement services; and capital structuring and other advisory services to portfolio companies. In addition, the company invests in private equity funds, real estate funds, hedge funds, and credit funds. TPG Inc. was founded in 1992 and is based in Fort Worth, Texas. The company operates as a subsidiary of TPG GP A, LLC.

About Monroe Capital

Monroe Capital Corporation is a business development company specializing in customized financing solutions in senior, unitranche and junior secured debt, subordinated debt financing and to a lesser extent, unsecured debt and equity, including equity co-investments in preferred and common stock and warrants. It also provides financing primarily to leveraged buyouts in lower middle-market companies. It focuses to invest in the United States and Canada. The fund prefers to invest in companies with EBITDA between $3 and $35 million. Its makes minority equity investments.