Long-established in the Asset Management industry, KKR & Co Inc (KKR, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 1%, juxtaposed with a three-month change of 18.69%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of KKR & Co Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 8/10
- Growth rank: 4/10
- GF Value rank: 1/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned KKR & Co Inc a GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding KKR & Co Inc's Business
KKR & Co Inc, with a market cap of $123.5 billion and sales of $21.35 billion, operates as one of the world's largest alternative asset managers. As of June 2024, the company manages $601.3 billion in total assets, including $487.3 billion in fee-earning AUM. KKR has two core segments: asset management and insurance. The asset management segment includes private markets—private equity, credit, infrastructure, energy, and real estate—and public markets—primarily credit and hedge/investment fund platforms. The insurance segment grew significantly after KKR's acquisition of Global Atlantic Financial Group, which focuses on retirement/annuity and life insurance lines as well as reinsurance.
Financial Strength Breakdown
KKR & Co Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The interest coverage ratio of 0.6 positions it worse than 94.7% of 453 companies in the Asset Management industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. Additionally, the Altman Z-Score of just 1.02 suggests potential financial distress. The company's debt-to-equity ratio of 2.32 and debt-to-Ebitda ratio of 4.78 further underscore its financial vulnerabilities.
Growth Prospects
A lack of significant growth is another area where KKR & Co Inc seems to falter. Over the past five years, the company has witnessed a decline in its EBITDA, with a three-year growth rate of -3.2% and a five-year growth rate of -5.2%. These figures underscore potential challenges in the company's profitability. Additionally, KKR & Co Inc's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Considering KKR & Co Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors seeking more robust investment opportunities can explore companies with stronger GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
