Why KKR (KKR) Stock Is Advancing This Morning

NEW YORK (TheStreet) -- Shares of KKR & Co.  (KKR) are up 1.55% to $24.94 in pre-market trade after Scotland-based, privately-owned OEG Offshore Group said that the investment firm agreed to acquire a majority interest in the energy services company, the Wall Street Journal reports.

The deal's financial details weren't disclosed.

OEG is a global provider of specialist equipment to the offshore oil and gas industry. The company said executive management would retain a "significant holding" in the company.

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KKR has entered into a number of energy-sector deals recently, including agreeing last month to buy a third of the renewable-energy unit of Spain's Acciona for $563 million, with plans to later list the unit on the stock exchange, the Journal said.

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 a few notable strengths, 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, solid stock price performance, 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 5.2%. 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 its closing price of one year ago, KKR's share price has jumped by 27.63%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, KKR should continue to move higher despite the fact that it has already enjoyed a very nice gain 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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