Analyzing KKR In Comparison To Competitors In Capital Markets Industry

In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating KKR KKR vis-à-vis its key competitors in the Capital Markets industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in the industry.

KKR Background

KKR is one of the world's largest alternative asset managers, with $577.6 billion in total managed assets, including $470.6 billion in fee-earning AUM, at the end of March 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).

By closely studying KKR, we can observe the following trends:

• The Price to Earnings ratio of 23.38 is 0.63x lower than the industry average, indicating potential undervaluation for the stock.

• With a Price to Book ratio of 4.33, which is 1.33x the industry average, KKR might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.

• With a relatively high Price to Sales ratio of 4.62, which is 1.07x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 3.08% that is 0.83% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.17 Billion, which is 1.7x above the industry average, indicating stronger profitability and robust cash flow generation.

• With lower gross profit of $1.03 Billion, which indicates 0.94x below the industry average, the company may experience lower revenue after accounting for production costs.

• With a revenue growth of 210.66%, which surpasses the industry average of 15.57%, the company is demonstrating robust sales expansion and gaining market share.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.

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.

By analyzing KKR in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

• KKR holds a middle position in terms of the debt-to-equity ratio compared to its top 4 peers.

• This indicates a balanced financial structure with a moderate level of debt and an appropriate reliance on equity financing with a debt-to-equity ratio of 2.31.

Key Takeaways

For KKR in the Capital Markets industry, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest the market values the company's assets and sales highly relative to competitors. In terms of ROE, KKR's performance is lower, reflecting less profitability from shareholder equity. Conversely, the high EBITDA, low gross profit, and high revenue growth indicate strong operational performance and potential for future growth compared to industry peers.

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