KKR Stock Falls Despite Record 2Q15 Earnings

KKR Stock Falls Despite Record 2Q15 Earnings

KKR beats estimates

KKR & Co. L.P. (KKR) reported its 2Q15 earnings on July 23, 2015. The company beat Wall Street analysts’ economic net income (or ENI) estimates of $0.62 per unit, with a posted ENI of $0.88 per unit. However, KKR stock has fallen approximately 10% over the last month. The company’s market capitalization stood at $18 billion.

KKR reported a 40% increase in its ENI to $840 million, backed by a strong investment performance of its portfolio. The company reported a 2Q15 profit of $376 million, or $0.78 per share, compared to $178 million in 2Q14. The company’s assets under management (or AUM) and fee paying assets under management (or FPAUM) reached $101.6 billion and $83.7 billion, respectively, as of June 30, 2015.

In a July 23 company press release, Henry R. Kravis and George R. Roberts, KKR’s co-chairmen and co-chief executive officers, said, “Our strong investment performance resulted in $840 million of Economic Net Income, a record quarterly figure for KKR. Additionally, we continued to scale several growth areas including our infrastructure and alternative credit businesses.”

Alternative investment giant

KKR & Co. L.P. is a global investment firm that manages funds for pensions, financial institutions, foundations, sovereign wealth funds, private banking platforms, family offices, insurance companies, endowments, and high net worth individuals (or HNWI).

Founded 37 years ago, KKR provides investment management services to fund limited partners or investors. The limited partners commit capital to private equity players in order to earn returns over and above the indexed returns. KKR also provides capital market services to its own firm, portfolio companies, and external clients.

Other asset managers

KKR’s revenue fell 18% in the last fiscal year. Let’s compare this to revenue growth for KKR’s peers.

• The Carlyle Group (CG) fell 7.2%.

• Blackstone Group (BX) rose 12%.

• Apollo Global Management (APO) fell 59.6%.

KKR also faces competition from other asset managers that form approximately 15% of the Financial Select Sector SPDR ETF (XLF).

For a more detailed analysis of the company, read KKR: The $100 billion alternative asset manager.

Continue to Next Part

Browse this series on Market Realist:

• Part 2 - KKR’s Private Markets Segment Reports Growth

• Part 3 - KKR’s Public Markets Segment Improves Performance in 2Q15

• Part 4 - KKR’s Capital Markets Segment Posts Strong 2Q15 Earnings