Answers to Questions about Your Favorite Stocks: KKR & Co. LP (KKR)

Brad asked me about KKR:

KKR & Co. Limited Partnership (KKR) is a global investment company, with $9.3 billion in 2013 revenues.

Wall Street expects KKR’s earnings per share (EPS) to fall 19% in 2014, rise 12% in 2015, and fall 10% in 2016 (December year-end).

The company reported first quarter results yesterday.  Those numbers don’t matter, and here’s why:  when I am picking stocks, the first number I look at is annual EPS.  If they are not projected to rise in the next three years, I look no further.  However, I will chat a little more about KKR’s other investment criteria.

The price-earnings ratio (PE) is 10.  This is a relatively fair number.  I certainly wouldn’t want to see a high PE on a stock with falling EPS — that would be a huge red flag, screaming overvalued.

KKR is a limited partnership.  Due to legal requirements on LP income payouts to shareholders, the company does not pay out the same dividend every quarter.  Here are recent dividends per share:  $0.99 in 2013, $0.84 in 2012, and $0.71 in 2011.

The stock broke through upside resistance in October, and has since been trading between $21.00-$26.50.  The chart pattern is neutral-to-poor, with near-term resistance at $24.00-$24.50.

Could the stock recover to the January high of $26.50?  Certainly, anything could happen.  But is there a logical reason for the stock to rise, based on fundamentals?  No.

I would not buy KKR.  There are stocks available with growing EPS and good dividends for growth & income investors.  And there are stocks available with growing earnings for traders.

Why do I emphasize growing earnings?  Because each of my investment criteria serve to lower risk.  A stock with growing EPS is more likely to rise, and less likely to fall, than a stock that lacks earnings growth.

If I owned KKR shares, I would put in a sell limit order at $24.25, good-til-canceled.  When it sells, I would reinvest in a stock with growing EPS and a bullish chart, to maximize my potential for capital gains.

Goodfellow LLC Rating:  Sell, Public.  (04/24/14)

KKR Chart

KKR data by YCharts

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Crista Huff


Goodfellow LLC

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Happy investing!

Crista Huff


Goodfellow LLC



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