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Inside Carlyle Group's 2Q17 Results

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Part 7
Inside Carlyle Group's 2Q17 Results PART 7 OF 8

Understanding Carlyle’s Discounted Valuations

Lower forward price to earnings ratio

Carlyle Group (CG) saw fundraising of $8.4 billion in 2Q17, and its management expects that in 2H17, the company should see an increase in the momentum of fundraising. In 2Q17, the company’s realized investment income stood at $11 million, while in 2Q16, it stood at $9 million. On a last-12-month basis, CG’s realized investment income stood at $33 million.

Understanding Carlyle’s Discounted Valuations

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CG’s one-year forward PE (price-to-earnings) ratio stood at 8.19x, which is lower than the peer average of 10.55x. Carlyle has lower valuations right now due to the declining momentum in FRE (fee-related earnings) it saw in 2Q17.

The fall in ENI (economic net income) in 2Q17 has also contributed to the company’s discounted valuations, but the company could recover from the discounted valuations on the back of an expected favorable fundraising environment in 2H17.

Peer comparisons

In 2Q17, Carlyle Group’s (CG) total AUM (assets under management) stood at $169.8 billion. Peer alternative asset managers (XLF) have the following one-year forward PE ratios:

  • Apollo Global Management (APO): 11.89x
  • Blackstone (BX): 12.15x
  • KKR & Company (KKR): 7.63x
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