Q3 Earnings Preview for KKR (NYSE:KKR)

in EARNINGS/INVESTING IDEAS by

KKR & Co. Inc. (NYSE:KKR) is scheduled to report Q3 earnings results before markets open for trading on October 30, 2020.

The company is expected to report earnings of $0.40/share on revenue of $480.8 million. The consensus earnings per share (EPS) of $0.40/share is based on a poll of 18 analysts and represents a decline in eps of −13.6% over the same quarter last year, when the company reported earnings of $0.46/share.

The revenue forecast of $480.8 million based on a poll of 9 analysts implies a year-over-year (YoY) growth in revenue of 7.8%. Last year the company reported $445.9 million in revenue for the quarter.

Expected to report EPS contraction of −13.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $480.81 $445.92 7.8%
EPS $0.40 $0.46 −13.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 8 out of the last 8 tracked quarters.

What are your expectations from KKR & Co. Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.35 $0.39 10.4% Beat
Q1, 2020 $0.41 $0.42 1.2% Beat
Q4, 2019 $0.42 $0.44 5.5% Beat
Q3, 2019 $0.43 $0.46 8.0% Beat
Q2, 2019 $0.34 $0.39 13.7% Beat
Q1, 2019 $0.37 $0.38 3.6% Beat
Q4, 2018 $0.49 $0.55 13.1% Beat
Q3, 2018 $0.58 $0.60 4.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 1.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $35.80 $36.31 1.4% Increase
May 6, 2020 $24.60 $26.89 9.3% Increase
January 31, 2020 $30.39 $31.90 5.0% Increase
October 29, 2019 $28.70 $28.82 0.4% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of 1.88, the model suggests that the company is likely an earnings manipulator. A value of 1.88 implies a 3.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

KKR & Co. Inc. is currently trading at $36.50/share, down −2.4% for the day. The company is trading at approximately 96.1% of its 52-week high of $37.97/share. The company’s stock price is up 0.5% since the last earnings report and down −2.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 53.67 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:KKR Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 122.89 and a forward P/E multiple of 15.53.

KKR & Co. Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.26. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $36.50
P/E Ratio 122.9x
P/E Ratio (Fwd) 15.5x
PEG Ratio −1.4
Total Debt / Total Capital 36.0%
Levered Free Cash Flow -$5.444 billion
Price To Sales 23.6x

Finbox

KKR & Co. Inc. is a large-cap stock with a market capitalization of $20.409 billion. The company operates in the Financials sector and the Capital Markets industry.

KKR & Co. Inc. 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, turnaround, lower middle market and middle market investments. The firm considers investments in all industries with a focus on software, security, semiconductors, consumer electronics, internet of things (iot), internet, information services, information technology infrastructure, financial technology, network and cyber security architecture, engineering and operations, content, technology and hardware, energy and infrastructure, real estate, services industry with a focus on business services, intelligence, industry-leading franchises and companies in natural resource, containers and packaging, agriculture, airports, ports, forestry, electric utilities, textiles, apparel and luxury goods, household durables, digital media, insurance, brokerage houses, non-durable goods distribution, supermarket retailing, grocery stores, food, beverage, and tobacco, hospitals, entertainment venues and production companies, publishing, printing services, capital goods, financial services, specialized finance, pipelines, and renewable energy. In energy and infrastructure, it focuses on the upstream oil and gas and equipment, minerals and royalties and services verticals. In real estate, the firm seeks to invest in private and public real estate securities including property-level equity, debt and special situations transactions and businesses with significant real estate holdings, and oil and natural gas properties. The firm also invests in asset services sector that encompasses a broad array of B2B, B2C and B2G services verticals including asset-based, transport, logistics, leisure/hospitality, resource and utility support, infra-like, mission-critical, and environmental services. Within Americas, the firm prefers to invest in consumer products; chemicals, metals and mining; energy and natural resources; financial services; healthcare; industrials; media and communications; retail; and technology. Within Europe, the firm invests in consumer and retail; energy; financial services; health care; industrials and chemicals; media and digital; and telecom and technologies. Within Asia, it invests in consumer products; energy and resources; financial services; healthcare; industrials; logistics; media and telecom; retail; real estate; and technology. It also seeks to make impact investments focused on identifying and investing behind businesses with positive social or environmental impact. The firm seeks to invest in mid to high-end residential developments, but can invest in other projects throughout Mainland China through outright ownership, joint ventures, and merger. It invests globally with a focus on Australia, emerging and developed Asia, Middle East and Africa, Nordic, Southeast Asia, Asia Pacific, Ireland, Hong Kong, Japan, Taiwan, India, Vietnam, Malaysia, Singapore, Indonesia, France, Germany, Netherlands, United Kingdom, Caribbean, Mexico, South America, North America, Brazil, Latin America, Korea with a focus on South Korea, and United States of America. In the United States and Europe, the firm focuses on buyouts of large, publicly traded companies. It seeks to invest $30 million to $717 million in companies with enterprise values between $500 million to $2389 million. The firm prefers to invest in a range of debt and public equity investing and may co-invest. It seeks a board seat in its portfolio companies and a controlling ownership of a company or a strategic minority positions

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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