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What Will Drive KKR's Performance in 2017?

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What Will Drive KKR's Performance in 2017? PART 1 OF 8

KKR Portfolio to Rise on Broad Markets and Private Holdings in 2017

KKR’s expected performance

KKR & Company (KKR) is expected to post earnings per share (or EPS) of $0.49 in 1Q17 as compared to a loss per share of $0.65 in the corresponding quarter last year. The growth is expected to be on the back of higher performance fees and rising valuations of holdings. In 4Q16, the company posted EPS (earnings per share) of $0.40, missing Wall Street analyst estimates of $0.43. Sequentially, the company saw a dip in EPS from $0.71 in 3Q16. The company posted distributable after-tax income of $389.9 million in 4Q16 as compared to $168.6 million in 4Q15.

KKR Portfolio to Rise on Broad Markets and Private Holdings in 2017

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In 4Q16, KKR’s holdings in First Data (FDC) saw further recovery. The stock rose 8% in 4Q16. Alternative asset managers have reported improved numbers in 4Q16 on rises in broad markets. KKR’s private equity portfolio rose 3.4% on a rebound in equities (SPY) (SPX). Its major investments include Zimmer Biomet Holdings (ZBH), Walgreens Boots Alliance (WBA), HCA Holdings (HCA), and GoDaddy (GDDY).

KKR’s economic net income (or ENI) include both its realized and unrealized investment gains. The company reported an economic net income of $339.2 million in 4Q16 as compared to $70.5 million in 4Q15. In 1Q17, the ENI is expected to rise on broad market rises and rebounds in the company’s commodity holdings.

On December 31, 2016, the company’s assets under management and its fee-paying assets under management stood at $130 billion and $101 billion, respectively. These amounts represent rises of 8% and 11%, respectively, year-over-year.

Alternative investor

Founded 37 years ago, KKR offers investment management services to investors and limited or institutional players. Limited partners provide and commit capital to private equity players in an effort to generate superior returns. The company also offers capital market services to its own company, its portfolio companies, and its external clients.

In this series, we’ll study KKR’s private and public markets, analyst ratings, assets under management, balance sheet, distribution, and valuations.

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