Has KKR (KKR) Run Too Far After Strong Multi Year Gains?

• Wondering if KKR at US$134.57 is offering good value right now, or if the easy money has already been made? This article walks through the key numbers so you can decide whether the current price makes sense for you.
• KKR's share price has moved 4.6% over the last week and 4.0% over the last month, with a 4.4% return year to date. Over a longer stretch, the stock shows a 7.7% decline over 1 year, along with very large total returns over 3 and 5 years.
• Recent attention on KKR has largely focused on how investors are reacting to its role as a major alternative asset manager and what that means for future fund flows and fee potential. This context helps explain why shorter term moves can look quite different from the very large multi year performance.
• Despite this interest, KKR currently scores 0/6 on our valuation checks for being undervalued, as shown in its valuation score. Next, we will look at how standard approaches like P/E, cash flow based models and peer comparisons line up for KKR, then finish with a broader way to think about valuation that goes beyond any single metric.

KKR scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: KKR Excess Returns Analysis

The Excess Returns model looks at how much profit KKR is expected to earn above its required return on equity, then capitalizes those “excess” profits into an estimate of what the shares could be worth today.

For KKR, the model uses a Book Value of US$30.54 per share and a Stable EPS of US$5.59 per share, based on weighted future Return on Equity estimates from 7 analysts. The Average Return on Equity is 11.13%, while the Cost of Equity is US$4.67 per share, implying an Excess Return of US$0.93 per share. The Stable Book Value input is US$50.27 per share, sourced from weighted future Book Value estimates from 2 analysts.

Combining these inputs, the Excess Returns framework produces an intrinsic value of about US$65.66 per share. Compared with the current price of US$134.57, this implies the shares are 104.9% overvalued on this model, so the current market price sits well above the model’s estimate.

Result: OVERVALUED

Our Excess Returns analysis suggests KKR may be overvalued by 104.9%. Discover 878 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for KKR.

Approach 2: KKR Price vs Earnings

For a profitable company like KKR, the P/E ratio is a straightforward way to think about what you are paying for each dollar of earnings. It links the share price directly to current earnings, which many investors use as a quick anchor for what feels reasonable.

What counts as a “normal” P/E often reflects how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher risk usually lines up with a lower P/E.

KKR currently trades on a P/E of 52.80x, compared with the Capital Markets industry average of 25.75x and a peer average of 37.96x. Simply Wall St’s Fair Ratio for KKR is 26.28x, which is its proprietary view of the P/E the market might typically assign given factors such as earnings growth, industry, profit margins, market cap and company specific risks. This Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for these business characteristics rather than treating all companies as identical. With KKR’s actual P/E of 52.80x sitting well above the Fair Ratio of 26.28x, the shares screen as expensive on this metric.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1456 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your KKR Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce Narratives, a simple tool on Simply Wall St’s Community page that lets you spell out your story for KKR, link that story to specific forecasts for revenue, earnings and margins, and then see a fair value that you can compare with today’s price. The whole view updates automatically as new news or earnings arrive. One investor might build a more upbeat KKR Narrative that aligns with a fair value near US$187, while another might take a more cautious view closer to US$135. Both can quickly see whether their own fair value sits above or below the current market price and what that means for their next move.

Do you think there's more to the story for KKR? Head over to our Community to see what others are saying!

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.

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