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How Will KKR & Company Perform Moving Forward?

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Earnings estimates

Wall Street analysts expect KKR & Company (KKR) to have EPS (earnings per share) of $0.56 in 1Q18, an improvement compared to its 4Q17 EPS.

KKR witnessed a substantial rise in its total segment revenues from $664.4 million in 4Q16 to $1.0 billion in 4Q17. This rise was mainly aided by the favorable momentum in its carried interest gains. However, a rise in management fees related to the private markets and a rise in transaction fees with respect to private as well as capital markets were also major contributors.

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Expectations moving forward

Compared to 4Q17, KKR is expected to witness declining momentum in its private equity portfolio in 1Q18, as the S&P 500 didn’t witness a sharp increase in the first two months of 2018. The S&P 500 witnessed a rise of just 1.5% in January as well as in February 2018.

Notably, in 4Q17, KKR’s private equity portfolio witnessed a rise of 7.4%. However, private equity companies are currently facing issues in making buyout deals due to higher valuations—mainly due to a reduction in US corporate taxes as well as technology. Lower corporate taxes could lead to a rise in earnings and, as a result, increased valuations of firms.

KKR’s beta value is 2.09. Peers (XLF) Oaktree Capital Group (OAK), Ameriprise Financial (AMP), and Ares Management (ARES) have beta values of 0.95, 1.91 and 1.64, respectively.

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