Financial Analysis: LendingClub (LC) and TPG RE Finance Trust (TRTX)
LendingClub (NYSE: LC) and TPG RE Finance Trust (NYSE:TRTX) are both small-cap financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, valuation, risk, analyst recommendations and dividends.
TPG RE Finance Trust pays an annual dividend of $0.33 per share and has a dividend yield of 1.7%. LendingClub does not pay a dividend. TPG RE Finance Trust pays out 22.4% of its earnings in the form of a dividend.
This is a summary of current recommendations and price targets for LendingClub and TPG RE Finance Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|TPG RE Finance Trust||0||2||3||0||2.60|
LendingClub currently has a consensus target price of $6.54, suggesting a potential upside of 59.09%. TPG RE Finance Trust has a consensus target price of $21.20, suggesting a potential upside of 9.00%. Given LendingClub’s higher probable upside, research analysts plainly believe LendingClub is more favorable than TPG RE Finance Trust.
Institutional & Insider Ownership
86.5% of LendingClub shares are held by institutional investors. Comparatively, 26.4% of TPG RE Finance Trust shares are held by institutional investors. 9.7% of LendingClub shares are held 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.
Earnings and Valuation
This table compares LendingClub and TPG RE Finance Trust’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|LendingClub||$495.47 million||3.44||-$145.96 million||($0.23)||-17.87|
|TPG RE Finance Trust||$92.39 million||12.55||$69.96 million||$1.47||13.23|
TPG RE Finance Trust has lower revenue, but higher earnings than LendingClub. LendingClub is trading at a lower price-to-earnings ratio than TPG RE Finance Trust, indicating that it is currently the more affordable of the two stocks.
This table compares LendingClub and TPG RE Finance Trust’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|
TPG RE Finance Trust beats LendingClub on 8 of the 14 factors compared between the two stocks.
LendingClub Corporation provides online marketplace to connect borrowers and investors. Consumers and small business owners borrow through Lending Club. Investors use Lending Club to earn risk-adjusted returns from an asset class that has been closed to many investors and only available on a limited basis to large institutional investors. Its technology automates aspects of operations, including the borrower application process, data gathering, credit decisioning and scoring, loan funding, investing and servicing, regulatory compliance and fraud detection. Its platform offers analytical tools and data to enable investors to make decisions and assess their portfolios. Its technology platform has allowed it to expand its offerings from personal loans to include small business loans, and to expand investor classes from individuals to institutions and create various investment vehicles.
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.
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