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KKR Stock Falls 4.5% on Q4 Earnings Miss, Revenues Rise
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Shares of KKR & Co. L.P. (KKR - Free Report) lost nearly 4.5% following the release of its fourth-quarter 2017 earnings last week. The company reported adjusted economic net income per unit of 48 cents, missing the Zacks Consensus Estimate of 51 cents. However, the bottom line improved 20% from the prior-year quarter.
Results primarily reflected drastic rise in expenses. However, higher revenues and asset growth look impressive.
Net income attributable to KKR for the quarter was $166.4 million or 32 cents per unit, down from $171 million or 35 cents per unit in the year-ago quarter.
For 2017, economic net income was $2.38 per unit, up from 68 cents in the prior year. Net income attributable to KKR came in at $984.9 million or $1.95 per unit, up from $287.1 million or 59 cents per unit in 2016.
Revenues & Expenses Rise
Total revenues (GAAP basis) amounted to $941.6 million, surging 95.6% on a year-over-year basis.
Total operating expenses jumped 40.6% year over year to $636.7 million. The rise was due to higher compensation & benefits costs and occupancy and related charges, which were partially offset by lower general, administrative and other expenses.
As of Dec 31, 2017, total assets under management (AUM) grew 30% year over year to $168.5 billion. Also, fee-paying AUM summed $117.4 billion, improving 15.7% from the Dec 31, 2016 figure.
Our Viewpoint
KKR will continue to exploit lucrative investment opportunities on the back of its efficient fund-raising capability, in the quarters ahead. This is expected to support its revenue growth. However, due to the company’s continuous expansion of its global footprint, expenses are anticipated to rise.
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2017 adjusted earnings of $6.24 per share outpaced the Zacks Consensus Estimate of $6.08. Results benefited from improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.
Ameriprise Financial Inc.’s (AMP - Free Report) fourth-quarter 2017 adjusted operating earnings per share of $3.26 comfortably surpassed the Zacks Consensus Estimate of $3.09. Results benefited from an improvement in revenues as well as growth in AUM and assets under administration. However, rise in expenses acted as a headwind.
Invesco Ltd. (IVZ - Free Report) reported fourth-quarter 2017 adjusted earnings of 73 cents per share, outpacing the Zacks Consensus Estimate of 70 cents. Results were primarily supported by higher revenues and long-term net inflows. However, increase in operating expenses was an undermining factor.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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KKR Stock Falls 4.5% on Q4 Earnings Miss, Revenues Rise
Shares of KKR & Co. L.P. (KKR - Free Report) lost nearly 4.5% following the release of its fourth-quarter 2017 earnings last week. The company reported adjusted economic net income per unit of 48 cents, missing the Zacks Consensus Estimate of 51 cents. However, the bottom line improved 20% from the prior-year quarter.
Results primarily reflected drastic rise in expenses. However, higher revenues and asset growth look impressive.
Net income attributable to KKR for the quarter was $166.4 million or 32 cents per unit, down from $171 million or 35 cents per unit in the year-ago quarter.
For 2017, economic net income was $2.38 per unit, up from 68 cents in the prior year. Net income attributable to KKR came in at $984.9 million or $1.95 per unit, up from $287.1 million or 59 cents per unit in 2016.
Revenues & Expenses Rise
Total revenues (GAAP basis) amounted to $941.6 million, surging 95.6% on a year-over-year basis.
Total operating expenses jumped 40.6% year over year to $636.7 million. The rise was due to higher compensation & benefits costs and occupancy and related charges, which were partially offset by lower general, administrative and other expenses.
As of Dec 31, 2017, total assets under management (AUM) grew 30% year over year to $168.5 billion. Also, fee-paying AUM summed $117.4 billion, improving 15.7% from the Dec 31, 2016 figure.
Our Viewpoint
KKR will continue to exploit lucrative investment opportunities on the back of its efficient fund-raising capability, in the quarters ahead. This is expected to support its revenue growth. However, due to the company’s continuous expansion of its global footprint, expenses are anticipated to rise.
KKR & Co. L.P. Price, Consensus and EPS Surprise
KKR & Co. L.P. Price, Consensus and EPS Surprise | KKR & Co. L.P. Quote
KKR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Investment Managers
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2017 adjusted earnings of $6.24 per share outpaced the Zacks Consensus Estimate of $6.08. Results benefited from improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.
Ameriprise Financial Inc.’s (AMP - Free Report) fourth-quarter 2017 adjusted operating earnings per share of $3.26 comfortably surpassed the Zacks Consensus Estimate of $3.09. Results benefited from an improvement in revenues as well as growth in AUM and assets under administration. However, rise in expenses acted as a headwind.
Invesco Ltd. (IVZ - Free Report) reported fourth-quarter 2017 adjusted earnings of 73 cents per share, outpacing the Zacks Consensus Estimate of 70 cents. Results were primarily supported by higher revenues and long-term net inflows. However, increase in operating expenses was an undermining factor.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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