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How Apollo’s Valuation Stacks Up

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Lower valuation

Apollo Global Management (APO) has a one-year forward PE (price-to-earnings) ratio of 9.8x, whereas its peers’ average ratio is 9.9x. Peers Fortress Investment Group (FIG), Ares Management (ARES), and Oaktree Capital (OAK) have ratios of 8.5x, 10.3x, and 11.0x, respectively.

Apollo’s discounted valuation may be due to its carried interest income falling between 3Q16 and 3Q17. However, its economic net income stood at $431.6 million in 3Q17. Apollo invested $3.3 billion in 3Q17. Over the last 12 months, it has deployed $12.8 billion.

Distributable earnings

Apollo’s after-tax distributable earnings rose from $148.5 million in 3Q16 to $173.5 million in 3Q17. The company has declared a quarterly dividend of $0.39 per share in November 2017, compared with $0.52 per share in August 2017. The quarterly dividend declared in November 2017 will be paid on November 30, 2017. Whereas Apollo’s current PE ratio is 9.5x, peers (XLF) Oaktree Capital (OAK), Fortress Investment Group (FIG), and Ares Management (ARES) have ratios of 9.8x, 10.7x, and 33.1x, respectively.

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