Recent returns and business context for KKR (KKR)

KKR (KKR) has drawn investor attention after a mixed stretch of returns, with the stock down over the past month but higher over the past 3 months, set against a backdrop of declining annual revenue and higher net income.

Short term momentum has softened, with the stock down 7.33% on a 1 month share price basis and lower year to date, while the 3 year total shareholder return of 72.84% still points to a strong longer term outcome for those who stayed invested.

If you are comparing KKR with other financial and alternative asset managers, it can help to broaden the search and review 21 top founder-led companies

So with KKR shares down over the past year, trading at $93.40 with a value score of 3 and an indicated discount to both analyst targets and intrinsic value, is there meaningful upside left, or is the market already pricing in future growth?

Most Popular Narrative: 10.6% Overvalued

According to the most followed narrative on KKR, the fair value estimate of $84.45 sits below the last close of $93.40, which puts the spotlight on the assumptions behind that gap.

Desde un enfoque Buffett puro:

KKR empieza a parecer menos un gestor de private equity y más un “compounder de capital permanente”.

Want to see what is driving that compounder label for KKR, and how earnings power, revenue mix and long term margins feed into that $84.45 figure?

Result: Fair Value of $84.45 (OVERVALUED)

However, this compounder style story could be tested if private credit losses hit fee income harder than expected, or if fundraising slows and compresses long term earnings power.

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Another View: Cash Flows Point to Undervaluation

While the leading narrative tags KKR as around 10.6% overvalued at a fair value of $84.45, our DCF model that values future cash flows suggests the stock is trading at about a 16.9% discount to an intrinsic value of $112.40. Which set of assumptions do you trust more?

For a closer look at how this cash flow based view is built, including the long term forecasts that sit under it, Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out KKR for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The mixed messages on valuation and returns can feel conflicting, so it makes sense to look through the data yourself and move quickly while sentiment is still forming. To see exactly which potential upsides others are focused on, check the 3 key rewards

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.