TPG RE Finance Trust (NASDAQ: TRTX) and Discover Financial Services (NYSE:DFS) are both financials companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Profitability

This table compares TPG RE Finance Trust and Discover Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TPG RE Finance Trust 48.73% 10.27% 3.73%
Discover Financial Services 20.91% 21.28% 2.46%

Institutional and Insider Ownership

85.5% of Discover Financial Services shares are held by institutional investors. 1.0% of Discover Financial Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for TPG RE Finance Trust and Discover Financial Services, 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
Discover Financial Services 1 7 16 0 2.63

TPG RE Finance Trust presently has a consensus target price of $21.20, indicating a potential upside of 6.27%. Discover Financial Services has a consensus target price of $73.63, indicating a potential upside of 12.00%. Given Discover Financial Services’ stronger consensus rating and higher probable upside, analysts plainly believe Discover Financial Services is more favorable than TPG RE Finance Trust.

Dividends

Discover Financial Services pays an annual dividend of $1.40 per share and has a dividend yield of 2.1%. TPG RE Finance Trust does not pay a dividend. Discover Financial Services pays out 24.2% of its earnings in the form of a dividend. TPG RE Finance Trust has raised its dividend for 6 consecutive years.

Earnings and Valuation

This table compares TPG RE Finance Trust and Discover Financial Services’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TPG RE Finance Trust N/A N/A N/A N/A N/A
Discover Financial Services $7.17 billion 3.41 $2.16 billion $5.79 11.35

Discover Financial Services has higher revenue and earnings than TPG RE Finance Trust.

Summary

Discover Financial Services beats TPG RE Finance Trust on 8 of the 12 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 Discover Financial Services

Discover Financial Services (DFS) is a direct banking and payment services company. The Company is a bank holding company, as well as a financial holding company. The Company operates through two segments: Direct Banking and Payment Services. It provides direct banking products and services, and payment services through its subsidiaries. It offers its customers credit card loans, private student loans, personal loans, home equity loans and deposit products. The Company’s Direct Banking segment includes consumer banking and lending products, specifically Discover-branded credit cards issued to individuals and small businesses on the Discover Network and other consumer banking products and services. The Company’s direct banking offers credit cards, student loans, personal loans, home equity loans, and other consumer lending and deposit products. The Payment Services segment includes PULSE, Diners Club and the Company’s Network Partners business.

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