Comparative Study: KKR & Co And Industry Competitors In Capital Markets Industry

In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating KKR & Co KKR in relation to its major competitors in the Capital Markets industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company's performance within the industry.

KKR & Co Background

KKR is one of the world's largest alternative asset managers, with $552.8 billion in total managed assets, including $446.4 billion in fee-earning AUM, at the end of 2023. The company has two core segments: asset management (which includes private markets—private equity, credit, infrastructure, energy, and real estate—and public markets—primarily credit and hedge/investment fund platforms) and insurance (following the firm's initial investment in, and then ultimate purchase of, Global Atlantic Financial Group, which is engaged in retirement/annuity and life insurance lines as well as reinsurance). On the asset management side, private markets account for 50% of fee-earning AUM and 70% of base management fees, while public markets account for 50% and 30%, respectively.

Through a thorough examination of KKR & Co, we can discern the following trends:

• A Price to Earnings ratio of 24.12 significantly below the industry average by 0.58x suggests undervaluation. This can make the stock appealing for those seeking growth.

• The current Price to Book ratio of 3.82, which is 0.78x the industry average, is substantially lower than the industry average, indicating potential undervaluation.

• With a relatively high Price to Sales ratio of 6.28, which is 1.28x the industry average, the stock might be considered overvalued based on sales performance.

• The Return on Equity (ROE) of 4.81% is 0.3% above the industry average, highlighting efficient use of equity to generate profits.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.68 Billion is 2.02x above the industry average, highlighting stronger profitability and robust cash flow generation.

• With lower gross profit of $1.12 Billion, which indicates 0.95x below the industry average, the company may experience lower revenue after accounting for production costs.

• With a revenue growth of 75.7%, which surpasses the industry average of 6.31%, the company is demonstrating robust sales expansion and gaining market share.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

In light of the Debt-to-Equity ratio, a comparison between KKR & Co and its top 4 peers reveals the following information:

• KKR & Co falls in the middle of the list when considering the debt-to-equity ratio.

• This indicates that the company has a moderate level of debt relative to its equity with a debt-to-equity ratio of 2.16, suggesting a balanced financial structure with a reasonable debt-equitymix.

Key Takeaways

The low PE and PB ratios suggest that KKR & Co may be undervalued compared to its peers in the Capital Markets industry. However, the high PS ratio indicates that the company's stock price may be relatively high based on its revenue. On the other hand, the high ROE, EBITDA, and revenue growth of KKR & Co reflect strong financial performance and growth potential, despite the low gross profit margin.

This article was generated by Benzinga's automated content engine and reviewed by an editor.