The firm reported a 3% year over year decline in profit as a result of lower appreciation of its investments, overshadowing a near-doubling in fees it received for managing assets and doing deals, Reuters reports.
The decline in earnings was less than most analysts expected, and the firm's first-quarter dividend, up 59% year-on-year on higher proceeds from asset sales, also exceeded most analysts' forecasts, Reuters noted.
The firm's private equity funds appreciated by 4.5%.
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Economic net income, or ENI, was $630.3 million, below the 647.7 million of a year ago.
This translated into after-tax ENI of 82 cents per adjusted share versus the average 52 cents forecast by analysts in a Thomson Reuters poll.
TheStreet Ratings team rates KKR & CO LP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate KKR & CO LP (KKR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- KKR & CO LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KKR & CO LP increased its bottom line by earning $2.29 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($2.38 versus $2.29).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 187.3% when compared to the same quarter one year prior, rising from $96.73 million to $277.91 million.
- KKR, with its decline in revenue, underperformed when compared the industry average of 7.3%. Since the same quarter one year prior, revenues fell by 29.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market, KKR & CO LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: KKR Ratings Report