KKR’s Valuation amid Rising Equity Valuations in 2017
KKR & Co. (KKR) has posted earnings per share (or EPS) of $1.76 over the last four quarters.
Analysts gave KKR an average target price of $21.42 from the current price, suggesting a rise of 14.3%.
KKR & Co. (KKR) has reported an increase in its economic net income (or ENI) to $668.5 million in 1Q17 compared to $383.2 million in 4Q16.
KKR & Co. (KKR) paid a fixed dividend of $0.17 in May 2017 according to its policy announced in 2016.
KKR has seen a decline in its base fees to $85.5 million in 1Q17 compared to $86.7 million in 4Q16.
KKR & Co. decided to invest $150 million in Pandora Media, which is expected to close in 2Q17. This transaction would result in increasing revenues for KKR’s Private Markets segment.
In 1Q17, KKR & Co. (KKR) deployed ~$5.4 billion in its Public Markets and Private Markets segments. KKR is expected to post EPS of $0.49 in 2Q17 and $2.15 in fiscal 2017, representing year-over-year growth of 113% and 216%, respectively.
It remains to be seen whether Trump’s Administration repeals all or part of the Dodd-Frank Act. Removing provisions could unlock big institutions’ value.
The Dodd-Frank Act brought regulations for financial giants after the financial crisis in 2007. Repealing Dodd-Frank could bring back risk-taking behavior.
President Trump wants to repeal all or part of the Wall Street Reform and Consumer Protection Act of 2010, popularly known as the “Dodd-Frank Act.”
Alternative asset managers (IYF) have seen improved analyst ratings in 1Q17.
Alternative asset managers (XLF) deployed record funds towards corporate credit and rate offerings in 1H16 due to distressed credit pricing.
Alternatives expect marginal growth in 1Q17 due to rising equities and improved liquidity across asset classes.
Blackstone Group (BX) is valued at 9.4x on a one-year forward earnings basis.
Alternative asset managers have distributed 40%–60% of their earnings in dividends.
Blackstone Group (BX), the biggest alternative asset manager, attracted $16.7 billion across its offerings in 4Q16, bringing its total over the past year to $69.7 billion.
Energy prices (USO) have gone below $50 per barrel in 1Q17, as OPEC and Russia pushed for higher prices through an output freeze rendered partially ineffective by a rise in the US oil rig count.
Among alternative managers, Blackstone (BX) has been a consistent outperformer in the real estate space.
In 2016, alternatives saw higher investments as well as exits on the back of improved liquidity, rising markets, higher valuations, and distressed pricing in corporate credit.
Alternative managers’ private equity divisions have seen a rebound in their holdings’ valuations since the second half of 2016.