Analyzing Carlyle Secured Lending (NASDAQ:CGBD) & TPG (NASDAQ:TPG)

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

Valuation and Earnings

This table compares Carlyle Secured Lending 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
Carlyle Secured Lending	$255.57 million	2.76	$69.97 million	$0.51	20.10
TPG	$4.67 billion	3.55	$184.59 million	$0.66	65.30

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

Dividends

Carlyle Secured Lending pays an annual dividend of $1.40 per share and has a dividend yield of 13.7%. TPG pays an annual dividend of $2.36 per share and has a dividend yield of 5.5%. Carlyle Secured Lending pays out 274.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TPG pays out 357.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Carlyle Secured Lending is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations for Carlyle Secured Lending and TPG, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carlyle Secured Lending	0	4	1	1	2.50
TPG	0	4	12	0	2.75

Carlyle Secured Lending presently has a consensus target price of $11.33, indicating a potential upside of 10.57%. TPG has a consensus target price of $61.07, indicating a potential upside of 41.70%. Given TPG’s stronger consensus rating and higher possible upside, analysts clearly believe TPG is more favorable than Carlyle Secured Lending.

Profitability

This table compares Carlyle Secured Lending and TPG’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carlyle Secured Lending	14.26%	8.85%	3.90%
TPG	4.67%	28.10%	8.03%

Institutional and Insider Ownership

24.5% of Carlyle Secured Lending shares are owned by institutional investors. Comparatively, 94.0% of TPG shares are owned by institutional investors. 0.3% of Carlyle Secured Lending shares are owned by insiders. Comparatively, 61.4% of TPG shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Carlyle Secured Lending has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, TPG has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500.

Summary

TPG beats Carlyle Secured Lending on 13 of the 17 factors compared between the two stocks.

About Carlyle Secured Lending

Carlyle Secured Lending, Inc. is business development company specializing in first lien debt, senior secured loans, second lien senior secured loan unsecured debt, mezzanine debt and investments in equities. It specializes in directly investing. It specializes in middle market. It targets healthcare and pharmaceutical, aerospace and defense, high tech industries, business services, software, beverage food and tobacco, hotel gamming and leisure, banking finance insurance and in real estate sector. The fund seeks to invest across United States of America, Luxembourg, Cayman Islands, Cyprus, and United Kingdom. It invests in companies with EBITDA between $25 million and $100 million.

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.