Barbarian At The Gate: KKR (KKR)

Trade-Ideas LLC identified KKR (KKR) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

KKR

(

KKR

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified KKR as such a stock due to the following factors:

  • KKR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $97.2 million.
  • KKR has traded 6.4 million shares today.
  • KKR traded in a range 207.9% of the normal price range with a price range of $1.40.
  • KKR traded above its daily resistance level (quality: 23 days, meaning that the stock is crossing a resistance level set by the last 23 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on KKR:

KKR & Co. L.P. is a private equity and real estate investment firm specializing in direct and fund of fund investments. It specializes in acquisitions, leveraged buyouts, management buyouts, credit special situations, growth equity, mature, mezzanine, distressed, and middle market investments. The stock currently has a dividend yield of 9.1%. KKR has a PE ratio of 19. Currently there are 7 analysts that rate KKR a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for KKR has been 3.4 million shares per day over the past 30 days. KKR has a market cap of $7.8 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.38 and a short float of 3% with 2.40 days to cover. Shares are down 26.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates KKR as a

buy

. Among the primary strengths of the company is its expanding profit margins over time. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The gross profit margin for KKR & CO LP is currently very high, coming in at 134.75%. It has increased significantly from the same period last year. Along with this, the net profit margin of 23.91% is above that of the industry average.
  • KKR & CO LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, KKR & CO LP reported lower earnings of $1.28 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.28).
  • KKR, with its very weak revenue results, has greatly underperformed against the industry average of 4.7%. Since the same quarter one year prior, revenues plummeted by 153.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of KKR & CO LP has not done very well: it is down 22.25% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 311.9% when compared to the same quarter one year ago, falling from $89.94 million to -$190.59 million.

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