Financial Contrast: FirstCash (FCFS) versus TPG RE Finance Trust (TRTX)

TPG RE Finance Trust (NYSE: TRTX) and FirstCash (NYSE:FCFS) are both consumer lending – nec companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Profitability

This table compares TPG RE Finance Trust and FirstCash’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TPG RE Finance Trust N/A N/A N/A
FirstCash 6.41% 8.45% 5.91%

Insider and Institutional Ownership

26.4% of TPG RE Finance Trust shares are held by institutional investors. Comparatively, 95.7% of FirstCash shares are held by institutional investors. 2.8% of FirstCash shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares TPG RE Finance Trust and FirstCash’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TPG RE Finance Trust $92.39 million 12.62 $69.96 million $1.47 13.31
FirstCash $1.09 billion 2.93 $60.12 million $2.34 28.91

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for TPG RE Finance Trust and FirstCash, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TPG RE Finance Trust 0 2 3 0 2.60
FirstCash 0 2 5 0 2.71

TPG RE Finance Trust presently has a consensus target price of $21.20, suggesting a potential upside of 8.38%. FirstCash has a consensus target price of $64.00, suggesting a potential downside of 5.40%. Given TPG RE Finance Trust’s higher probable upside, analysts clearly believe TPG RE Finance Trust is more favorable than FirstCash.

Dividends

TPG RE Finance Trust pays an annual dividend of $0.33 per share and has a dividend yield of 1.7%. FirstCash pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. TPG RE Finance Trust pays out 22.4% of its earnings in the form of a dividend. FirstCash pays out 34.2% 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. TPG RE Finance Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

FirstCash beats TPG RE Finance Trust on 9 of the 14 factors compared between the two stocks.

About TPG RE Finance Trust

TPG RE Finance Trust, Inc. is a commercial real estate finance company. The Company is engaged in originating, acquiring and managing commercial mortgage loans and other commercial real estate-related debt instruments. It focuses primarily on directly originating and selectively acquiring floating rate first mortgage loans that are secured by high quality commercial real estate properties undergoing some form of transition and value creation, such as re-tenanting, refurbishment or other form of repositioning. As of December 31, 2016, the Company’s portfolio consisted of 54 first mortgage loans. As of December 31, 2016, 97% of the loan commitments in its portfolio consisted of floating rate loans, and 98.6% of the loan commitments in its portfolio consisted of first mortgage loans.

About FirstCash

FirstCash, Inc., formerly First Cash Financial Services, Inc., is an operator of retail-based pawn stores in the United States and Latin America. The Company’s primary business is the operation of full-service pawn stores, which make small pawn loans secured by personal property, such as consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. The Company’s operates through two segments: the U.S. operations segment and the Latin America operations segment. The U.S. operations segment consists of all pawn and consumer loan operations in the United States and the Latin America operations segment consists of all pawn and consumer loan operations in Latin America, which includes operations in Mexico, Guatemala and El Salvador. In addition, some of the Company’s pawn stores offer small unsecured consumer loans or credit services products. The Company also operates consumer finance stores in Texas and Mexico.

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