Understanding Carlyle’s Premium Valuations after 3Q17 Results
Valuations after 3Q17
The Carlyle Group (CG) has an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) ratio of 15.18x on a next 12-month (or NTM) basis and thus has higher valuations. The company’s peer average EV-to-EBITDA ratio on an NTM basis is 13.21x.
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The Carlyle Group has a price-to-sales ratio of 2.31x on a trailing 12-month (or TTM) basis. Its peers (XLF) Apollo Global Management (APO), KKR & Co. (KKR), and Blackstone Group (BX) have price-to-sales ratios of 5.74x, 3.04x, and 6.24x, respectively, on a TTM basis.
The Carlyle Group has high valuations mainly because of deployments of $6.9 billion in 3Q17. However, on a last 12-month (or LTM) basis, the company has made deployments of $20.8 billion. The deployments in 3Q17 represent the highest deployments in any quarter since the company launched its initial public offering.
The company had realizations of $8.4 billion in 3Q17. On an LTM basis, it had realizations of $26.5 billion. The company reported fee-related earnings (or FRE) of $96 million in 3Q17 compared to $31 million in 3Q16.
In 3Q17, commodities-related recoveries favorably affected Carlyle’s FRE. The company reported distributable earnings of $260 million in 3Q17 compared to $228 million in 3Q16.