Critical Analysis: Invesco (NYSE:IVZ) & TPG (NASDAQ:TPG)

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

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Invesco	1	10	1	0	2.00
TPG	0	7	6	0	2.46

Invesco presently has a consensus price target of $18.88, suggesting a potential upside of 6.34%. TPG has a consensus price target of $63.00, suggesting a potential downside of 4.14%. Given Invesco’s higher possible upside, equities research analysts clearly believe Invesco is more favorable than TPG.

Risk and Volatility

Invesco has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500. Comparatively, TPG has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500.

Insider and Institutional Ownership

66.1% of Invesco shares are held by institutional investors. Comparatively, 94.0% of TPG shares are held by institutional investors. 2.0% of Invesco shares are held by company insiders. Comparatively, 76.5% of TPG shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Invesco pays an annual dividend of $0.82 per share and has a dividend yield of 4.6%. TPG pays an annual dividend of $1.52 per share and has a dividend yield of 2.3%. Invesco pays out -89.1% of its earnings in the form of a dividend. TPG pays out -447.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Invesco	-3.00%	8.83%	3.54%
TPG	0.69%	23.45%	7.85%

Earnings and Valuation

This table compares Invesco and TPG”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Invesco	$5.89 billion	1.36	-$96.90 million	($0.92)	-19.29
TPG	$2.47 billion	9.70	$80.09 million	($0.34)	-193.29

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

Summary

TPG beats Invesco on 12 of the 16 factors compared between the two stocks.

About Invesco

Invesco Ltd. is a publicly owned investment manager. The firm provides its services to retail clients, institutional clients, high-net worth clients, public entities, corporations, unions, non-profit organizations, endowments, foundations, pension funds, financial institutions, and sovereign wealth funds. It manages separate client-focused equity and fixed income portfolios. The firm also launches equity, fixed income, commodity, multi-asset, and balanced mutual funds for its clients. It launches equity, fixed income, multi-asset, and balanced exchange-traded funds. The firm also launches and manages private funds. It invests in the public equity and fixed income markets across the globe. The firm also invests in alternative markets, such as commodities and currencies. For the equity portion of its portfolio, it invests in growth and value stocks of large-cap, mid-cap, and small-cap companies. For the fixed income portion of its portfolio, the firm invests in convertibles, government bonds, municipal bonds, treasury securities, and cash. It also invests in short term and intermediate term bonds, investment grade and high yield bonds, taxable and tax-free bonds, senior secured loans, and structured securities such as asset-backed securities, mortgage-backed securities, and commercial mortgage-backed securities. The firm employs absolute return, global macro, and long/short strategies. It employs quantitative analysis to make its investments. The firm was formerly known as Invesco Plc, AMVESCAP plc, Amvesco plc, Invesco PLC, Invesco MIM, and H. Lotery & Co. Ltd. Invesco Ltd. was founded in 1935 and is based in Atlanta, Georgia with an additional office in Hamilton, Bermuda.

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.