Why Kohlberg, Kravis & Roberts (KKR) Stock Is Up Today

NEW YORK (TheStreet) -- Kohlberg, Kravis & Roberts  (KKR) shares are up 1.1% to $23.16 on Tuesday following reports that the company agreed to buy Internet Brands from Hellman & Friedman and JMI Equity Fund for $1.1 billion.

Internet Brands operates a number of sites including DoItYourself.com, Wikitravel, CarsDirect, CorvetteForum and Apartment Ratings, among others.

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TheStreet Ratings team rates KKR & CO LP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate KKR & CO LP (KKR) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year, increase in net income, expanding profit margins 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:

  • KKR's very impressive revenue growth greatly exceeded the industry average of 5.1%. Since the same quarter one year prior, revenues leaped by 87.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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's earnings per share declined by 5.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($2.74 versus $2.29).
  • The net income growth from the same quarter one year ago has exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income increased by 8.6% when compared to the same quarter one year prior, going from $193.44 million to $210.04 million.
  • The gross profit margin for KKR & CO LP is rather low; currently it is at 17.52%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, KKR's net profit margin of 37.40% significantly outperformed against the industry.
  • You can view the full analysis from the report here: KKR Ratings Report
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