Critical Review: TPG (NASDAQ:TPG) vs. Sprott (NYSE:SII)

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

Insider and Institutional Ownership

28.3% of Sprott shares are owned by institutional investors. Comparatively, 94.0% of TPG shares are owned by institutional investors. 18.3% of Sprott shares are owned by insiders. Comparatively, 61.4% of TPG shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Sprott has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500. Comparatively, TPG has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Sprott and TPG, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sprott	0	1	2	0	2.67
TPG	0	5	12	0	2.71

Sprott presently has a consensus price target of $230.00, suggesting a potential upside of 117.94%. TPG has a consensus price target of $61.00, suggesting a potential upside of 45.13%. Given Sprott’s higher possible upside, equities analysts clearly believe Sprott is more favorable than TPG.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sprott	$285.08 million	9.53	$67.35 million	$3.27	32.27
TPG	$4.67 billion	3.46	$184.59 million	$0.22	191.05

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sprott	21.99%	23.54%	17.48%
TPG	3.81%	28.13%	8.25%

Dividends

Sprott pays an annual dividend of $1.60 per share and has a dividend yield of 1.5%. TPG pays an annual dividend of $2.36 per share and has a dividend yield of 5.6%. Sprott pays out 48.9% of its earnings in the form of a dividend. TPG pays out 1,072.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sprott has increased its dividend for 1 consecutive years.

Summary

TPG beats Sprott on 10 of the 17 factors compared between the two stocks.

About Sprott

Sprott Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides asset management, portfolio management, wealth management, fund management, and administrative and consulting services to its clients. It offers mutual funds, hedge funds, and offshore funds, along with managed accounts. Further, the firm also provides broker-dealer activities. Sprott Inc. was formed on February 13, 2008 and is based in Toronto, Canada.

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.