Critical Analysis: Portman Ridge Finance (NASDAQ:PTMN) vs. TPG (NASDAQ:TPG)

TPG (NASDAQ:TPG) and Portman Ridge Finance (NASDAQ:PTMN) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Analyst Recommendations

This is a summary of current ratings for TPG and Portman Ridge Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TPG	0	8	8	2	2.67
Portman Ridge Finance	0	1	0	0	2.00

TPG currently has a consensus target price of $66.62, indicating a potential upside of 21.47%. Portman Ridge Finance has a consensus target price of $14.00, indicating a potential upside of 9.80%. Given TPG’s stronger consensus rating and higher probable upside, equities research analysts clearly believe TPG is more favorable than Portman Ridge Finance.

Earnings and Valuation

This table compares TPG and Portman Ridge Finance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TPG	$3.50 billion	5.92	$23.48 million	$0.09	609.33
Portman Ridge Finance	-$2.85 million	-59.12	-$5.93 million	($0.93)	-13.71

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

Dividends

TPG pays an annual dividend of $1.80 per share and has a dividend yield of 3.3%. Portman Ridge Finance pays an annual dividend of $1.88 per share and has a dividend yield of 14.7%. TPG pays out 2,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Portman Ridge Finance pays out -202.2% of its earnings in the form of a dividend. Portman Ridge Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

94.0% of TPG shares are owned by institutional investors. Comparatively, 30.1% of Portman Ridge Finance shares are owned by institutional investors. 76.5% of TPG shares are owned by insiders. Comparatively, 2.1% of Portman Ridge Finance shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility & Risk

TPG has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, Portman Ridge Finance has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500.

Profitability

This table compares TPG and Portman Ridge Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TPG	2.83%	25.79%	7.94%
Portman Ridge Finance	-15.92%	11.49%	4.54%

Summary

TPG beats Portman Ridge Finance on 15 of the 17 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 Portman Ridge Finance

Portman Ridge Finance Corporation is a business development company specializing in investments in unitranche loans (including last out), first lien loans, second lien loans, subordinated debt, equity co-investment, mezzanine, buyout in middle market companies. It also makes acquisitions in businesses complementary to the firm's business. It primarily invests in healthcare, cargo transport, manufacturing, industrial & environmental services, logistics & distribution, media & telecommunications, real estate, education, automotive, agriculture, aerospace/defense, packaging, electronics, finance, non-durable consumer, consumer products, business services, utilities, insurance, and food and beverage sectors. The fund typically invests $1 million to $20 million in its portfolio companies. It provides senior secured term loans from $2 million to $20 million maturing in five to seven years; second lien term loans from $5 million to $15 million maturing in six to eight years; senior unsecured loans $5 million to $23 million maturing in six to eight years; mezzanine loans from $5 million to $15 million maturing in seven to ten years; and equity investments from $1 to $5 million. The fund targets the companies with EBITDA between $5 million and $25 million. While investing in debt securities, it invests in those middle market firms with EBITDA between $10 million and $50 million and/or total debt between $25 million and $150 million. It invests in minority, and majority or control equity positions alongside its private equity sponsor partners.