KKR (KKR) Following Its Westcoast Pipeline Deal And Ci FLAVORS Buyout Looks Fully Valued
KKR (KKR) is back in the headlines after forming a joint venture with Enbridge and Apollo around Canada’s Westcoast Pipeline System, and closing its purchase of Japanese beauty and lifestyle company Ci FLAVORS.
These moves come as KKR’s share price trades at US$108.68, with a 90 day share price return of 14.39% and a 30 day share price return of 7.15%, yet the year to date share price is down 15.69% and the 1 year total shareholder return is down 21.52%. The 3 and 5 year total shareholder returns of 78.27% and 75.88% indicate that earlier momentum has cooled recently as investors reassess growth potential and risk around a busy deal pipeline and regulatory headlines.
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Short term returns for KKR have swung sharply while new deals keep coming. Does it make more sense to accept today’s pricing, or to wait for a clearer entry after the Westcoast and Ci FLAVORS moves settle into the numbers?
Most Popular Narrative: 28.7% Overvalued
The most followed narrative for KKR puts fair value at $84.45 per share, compared with the current $108.68 share price. This points to a premium and a thinner margin of safety.
KKR empieza a parecer menos un gestor de private equity y más un “compounder de capital permanente”.
La implicación final, en tono Buffett: Si la compañía continúa priorizando disciplina en capital, crecimiento del ingreso recurrente y alineación, la variable determinante para el inversor no será el próximo trimestre, sino la próxima década.
Want to understand why a compounder style business still screens above this fair value line? The narrative leans heavily on recurring earnings strength, long dated capital and a conservative cash flow build that keeps optional upside in the background.
Result: Fair Value of $84.45 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, that compounder style narrative for KKR still faces pressure if credit markets weaken sharply again or if regulators tighten the screws on insurance and private capital flows.
Find out about the key risks to this KKR narrative.
Another View On KKR’s Valuation
The user narrative pegs KKR’s fair value at $84.45 per share and labels the stock as overvalued. Our DCF model points in a different direction. It indicates KKR at $108.68 is trading about 25% below an estimated future cash flow value of $145.36. Which set of assumptions do you trust more?
Look into how the SWS DCF model arrives at its fair value.
Next Steps
With KKR’s story pulling in different directions, it helps to stress test the numbers yourself and decide quickly where you stand on its potential. To see what investors view as the key positives behind that potential, review 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.
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