Long-established in the Asset Management industry, KKR & Co Inc (KKR, Financial) has built a stellar reputation over the years. Recently, the company experienced a daily gain of 1.94%, alongside a significant three-month change of 35.33%. Despite these gains, the GF Score presents a nuanced picture, indicating potential headwinds due to lower rankings in key financial metrics. This analysis delves into these critical areas to uncover the evolving challenges KKR & Co Inc may face.
What Is the GF Score?
The GF Score is a proprietary ranking system developed by GuruFocus, assessing stocks across five key dimensions: financial strength, profitability, growth, valuation, and momentum. This system, which ranges from 0 to 100, has been backtested to correlate closely with long-term stock performance from 2006 to 2021. A higher GF Score typically indicates a greater potential for market outperformance.
- Financial strength rank: 4/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 1/10
- Momentum rank: 9/10
With a GF Score of 67 out of 100, KKR & Co Inc's future outperformance potential appears limited, prompting a closer examination of its financial metrics and business operations.
Understanding KKR & Co Inc's Business
KKR & Co Inc, with a market cap of $137.81 billion and sales of $22.81 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's business is divided into two core segments: asset management and insurance, the latter following its acquisition of Global Atlantic Financial Group. This strategic move diversifies KKR's offerings into retirement, annuity, life insurance, and reinsurance services.
Financial Strength Breakdown
KKR & Co Inc's financial strength is currently under scrutiny. The company's interest coverage ratio of 0.31 is alarmingly low, positioning it unfavorably within the Asset Management industry. Additionally, its Altman Z-Score of 1.02 indicates potential financial distress, and a high debt-to-equity ratio of 2.1 further exacerbates its risk profile. These factors suggest a precarious financial foundation that could impact KKR's ability to sustain its operations during economic downturns.
Growth Prospects
KKR & Co Inc's growth trajectory also presents concerns. The company has seen a decline in EBITDA over the past five years, with a three-year growth rate of -3.2% and a five-year rate of -5.2%. This declining trend, coupled with a low predictability rank of one star, underscores the challenges KKR faces in maintaining profitability and achieving consistent revenue and earnings growth.
Conclusion
Considering KKR & Co Inc's compromised financial strength, profitability, and growth metrics, the GF Score highlights the firm's challenging position for potential underperformance. Investors seeking more robust investment opportunities may explore other companies with higher GF Scores through the GF Score Screen. This tool offers insights into stocks better positioned for future success.
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.
