TPG (TPG)

Global alternative asset manager TPG (NASDAQ:TPG) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 168% year on year to $1.22 billion. Its GAAP profit of $0.20 per share increased from $0.04 in the same quarter last year.

Company Overview

Founded in 1992 and managing over 300 active portfolio companies across more than 30 countries, TPG (NASDAQ:TPG) is a global alternative asset management firm that invests across private equity, credit, real estate, and public market strategies.

Asset management firms oversee investment portfolios for institutions and individuals. The industry benefits from the growing global wealth pool, retirement savings needs, and expansion into alternative investments (private equity, real estate, etc.). However, firms face significant pressure from the shift to lower-cost passive investment products, regulatory requirements for fee transparency, and increasing technology costs to stay competitive in portfolio management and client service.

TPG competes with other major alternative asset managers including Blackstone (NYSE:BX), KKR (NYSE:KKR), Apollo Global Management (NYSE:APO), The Carlyle Group (NASDAQ:CG), and Brookfield Asset Management (NYSE:BAM).

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, TPG’s 22.5% annualized revenue growth over the last five years was exceptional. Its growth surpassed the average financials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. TPG’s annualized revenue growth of 29.3% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, TPG reported magnificent year-on-year revenue growth of 168%, and its $1.22 billion of revenue beat Wall Street’s estimates by 145%.

Assets Under Management (AUM) encompasses all client funds under a firm's investment management umbrella. The recurring fee structure on these assets provides consistent revenue generation, offering financial stability even during periods of poor investment returns, though sustained underperformance can impact future asset flows.

TPG’s AUM has grown at an annual rate of 38.2% over the last two years, much better than the broader financials industry and faster than its total revenue.

TPG’s AUM punched in at $286.4 billion this quarter, beating analysts’ expectations by 2.4%. This print was 19.8% higher than the same quarter last year.

Assessing topline trends is important, but the profitability of this growth matters for the bottom line. For asset managers, we look at fee-related earnings, which is profits generated from the core fee-based business, excluding more volatile components like performance fees (carry) and investment income. This is essentially the recurring profits of the business.

TPG’s annual fee-related earnings growth over the last four years was 23.4%, a top-notch result.

As you’ve seen throughout this report, we supplement with a two-year look because a four-year view may miss recent changes in the business. Over the last two years, TPG’s fee-related earnings grew at an annualized pace of 28.3%, an exceptional result.

In Q3, TPG’s fee-related earnings were $509.4 million, close to analysts’ expectations. These results represent 10.8% year-on-year growth.

Asset managers report ANI per share, which stands for adjusted net income per share. Make no mistake, this is essentially just the adjusted EPS that many other companies across various industries report.

ANI per share gives us a clearer picture of sustainable profitability by removing volatile investment gains/losses and exceptional expenses. The per-share calculation also reflects the impact of share repurchases or dilutive issuances, which directly affects what shareholders actually own.

Over the last three years, TPG’s flat ANI per share was weak. This dynamic occured despite a general decrease in its shares outstanding, meaning its underlying earnings actually shrank.

On a two-year basis, TPG’s annualized ANI per share growth accelerated to 28.3%. This performance was fantastic and tracked its fee-related earnings over the same period. We note the company continued repurchasing its shares during this timeframe, a tailwind for its ANI per share.

In Q3, TPG reported ANI per share of $0.53, up from $0.45 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates.

You may wonder when we will analyze book value and return on equity (ROE) since TPG is a financials company. We pay less attention to these metrics for asset managers because they are not great measures of business quality.

Asset managers are fee-based, capital light firms that manage client capital rather than their own, so they are not balance sheet businesses. Additionally, book value fails to capture the value of brands, investment track records, and other intangibles, thus understating intrinsic value, while ROE can look artificially high due to the relatively smaller bases of equity capital needed to operate the business compared to banks and insurers.

TPG reported $1.08 billion of cash and $1.79 billion of debt on its balance sheet in the most recent quarter.

As investors in high-quality companies, we primarily focus on whether a company’s profits can support its debt.

With $1.94 billion of fee-related earnings over the last 12 months, we view TPG’s 0.4× net-debt-to-earnings ratio as safe. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly TPG blew past analysts’ revenue expectations this quarter. We were also glad its AUM outperformed Wall Street’s estimates. On the other hand, fee-related earnings just met expectations. Zooming out, we think this quarter was solid. The market seemed to be hoping for more, and the stock traded down 1.1% to $54.25 immediately following the results.

Updated: December 4, 2025 at 11:36 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in TPG.

TPG is an amazing business ranking highly on our list. First of all, the company’s revenue growth was exceptional over the last five years. And while its weak EPS growth over the last three years shows it’s failed to produce meaningful profits for shareholders, its AUM growth was exceptional over the last two years. Additionally, TPG’s expanding fee-related earnings shows the asset management business is generating more profits.

TPG’s P/E ratio based on the next 12 months is 21.4x. This multiple isn’t necessarily cheap, but we’ll happily own TPG as its fundamentals shine bright. Investments like this should be held patiently for at least three to five years as they benefit from the power of long-term compounding, which more than makes up for any short-term price volatility that comes with relatively high valuations.

Wall Street analysts have a consensus one-year price target of $66 on the company (compared to the current share price of $60.75).