January 16, 2025

Asset Control and Quality

Investment for the Future

Here’s What Makes KKR Worth Investing for Solid Long-Term Returns

Here’s What Makes KKR Worth Investing for Solid Long-Term Returns

KKR & Co. KKR is well-positioned to benefit from impressive growth in assets under management (AUM). Also, the company’s decent organic growth and strong liquidity profile position it well for the future.

The Zacks Consensus Estimate for KKR’s 2024 and 2025 earnings has been revised upward over the past 60 days. This shows that analysts are optimistic regarding the company’s earnings growth prospects.

 

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

 

Let us dive deeper into the factors that make KKR stock worth betting on now.

Earnings Growth: KKR witnessed earnings growth of 15.1% over the past three to five years, driven by its organic growth strategy and rising AUM balances.

Also, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 7.6%.

The Zacks Consensus Estimate for earnings indicates a 37.7% year-over-year increase for 2024 and 30% growth for 2025.

Revenue Strength: KKR has been witnessing decent organic growth. The company’s net revenues saw a CAGR of 43.3% in the last five years (ended 2023) with some volatility. The trend persisted in the first nine months of 2024.

This increase was driven by expanding existing traditional private equity businesses and third-party businesses. Over the years, the company has added capabilities to capture a growing set of opportunities from infrastructure, real estate, growth and core investing activities. Through these efforts, it is increasing its deal counts meaningfully and growing its revenue base.

The Zacks Consensus Estimate for revenues indicates a 24% year-over-year increase for 2024 and 18.6% growth for 2025.

Impressive AUM Growth: The company’s total AUM has been witnessing improvements over the years. The metric saw a five-year (2018-2023) compound annual growth rate (CAGR) of 23.2%, with the trend continuing in the first nine months of 2024. The company’s efforts to improve and add investment strategies continue to support AUM growth.

At its 2024 investor day held in April, KKR laid out a plan to scale its core businesses as it aims to reach at least $1 trillion in AUM in five years. The firm intends to build on its existing asset management, insurance and strategic holding units to reach the milestone.

Solid Liquidity Position: The company enjoys a decent balance sheet. As of Sept. 30, KKR had an outstanding debt of $8.8 million, lower than the cash and investments of $16.3 million. Hence, given a decent liquidity position and manageable debt levels, the company is less likely to default on interest and debt repayments in the near term, even if the economic situation worsens.

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