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Investing.com - Wolfe Research initiated coverage on TPG Inc . (NASDAQ:TPG) with an outperform rating and a $60.00 price target on Friday. Currently trading at $49.93, TPG shows potential upside according to InvestingPro analysis, which indicates the stock is undervalued based on its proprietary Fair Value model.
The research firm cited TPG’s potential to double its assets under management from $250 billion to $500 billion over the medium term as a key factor in its bullish outlook. Wolfe Research highlighted the private equity manager’s strong track record of returns, which it believes will help TPG upsize its flagship funds despite challenging macroeconomic conditions. With a market capitalization of $18.45 billion and a strong current ratio of 4.24, InvestingPro data shows TPG maintains robust liquidity to support its growth initiatives.
Wolfe Research projects approximately 34% net growth in management fees through 2027, which should enable TPG to generate around 500 basis points of fee-related earnings (FRE) margin expansion during the same period. The firm also identified significant FRE upside potential from the successful scaling of TPG’s retail private equity vehicle, TPOP.
While Wolfe Research expressed some concerns about consensus expectations for growth in TPG’s AG Credit division and qualitative concerns regarding the company’s Impact franchise, it believes successful flagship fundraising and outsized growth in TPOP should be sufficient to meet overall consensus expectations.
The research firm forecasts that TPG can achieve approximately 18% compound annual growth rate in FRE (burdened by stock-based compensation) through 2027, justifying a mid-20s FRE multiple and suggesting room for share price appreciation as the company demonstrates the resilience of its franchise through fundraising and normalized monetizations.
In other recent news, TPG Inc. reported its first-quarter 2025 earnings, revealing earnings per share (EPS) of $0.48, which did not meet the forecasted $0.5168. Despite the earnings miss, TPG’s revenue stood at $1.04 billion, significantly surpassing the expected $488.15 million. Fee-related revenues were a notable aspect, reaching $476 million, reflecting strong operational performance. In another development, TPG Rise Climate announced plans to acquire a majority stake in Aurora Energy Research, with the transaction involving significant reinvestment from existing stakeholders like CGE Partners and 22C Capital. Aurora’s CEO, John Feddersen, expressed optimism about the partnership with TPG Rise Climate, aiming for continued innovation and impact in energy markets. Additionally, TPG disclosed that DB Holdings I, L.P., associated with the estate of David Bonderman, will sell 21 million Class A shares. The proceeds from this sale will go to the Bonderman Estate, with TPG not receiving any proceeds. Meanwhile, TPG’s strategic expansions, including new product launches and acquisitions, indicate potential for future growth, as highlighted by CEO John Winklereed’s focus on energy transition investments.
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