KKR & Co. Gears Up to Report Q1 Earnings: What's in the Cards?

KKR & Co. Inc. KKR is slated to report first-quarter 2025 results on May 1, before the opening bell. Its earnings and revenues in the quarter are expected to have increased on a year-over-year basis.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate. Results primarily reflected impressive growth in assets under management (AUM) and record transaction fees for the capital markets business. However, increased expenses were an undermining factor.

The company boasts an impressive earnings surprise history. Its earnings surpassed the consensus estimate in each of the trailing four quarters, with the average beat being 6.70%.
 

KKR & Co. Inc. Price and EPS Surprise

KKR & Co. Inc. price-eps-surprise | KKR & Co. Inc. Quote

KKR’s Q1 Earnings & Sales Estimates

The Zacks Consensus Estimate for earnings is pegged at $1.13 per share, which has remained unchanged over the past seven days. The figure indicates an increase of 16.5% from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $1.19 billion, indicating 20.6% growth.

Key Factors & Estimates for KKR in Q1

KKR has been witnessing increases in fee-earning AUM and total AUM on the back of its diversified product and revenue mix, superior position in the alternative investments space and net inflows. Given the high market volatility and increased client activity in the first quarter, KKR is expected to have recorded a rise in AUM balance as inflows grew.

The Zacks Consensus Estimate for AUM is pegged at $658.2 billion, suggesting a rise of 13.9% from the prior-year quarter. Likewise, the consensus estimate for fee-paying AUM is pegged at $527 billion, which indicates an increase of 12%.

The Zacks Consensus Estimate for management fees (segment revenues) for the to-be-reported quarter is pegged at $927.9 million, suggesting growth of 13.8% from the prior-year quarter. The consensus estimate for fee-related performance revenues (segment revenues) of $25 million implies an increase of 30.8%.

Additionally, KRR expects profits from deal exits to have been decent in the to-be-reported quarter. The company’s preliminary estimate, between Jan. 1 and March 24, 2025, for total realized performance income and net realized investment income is more than $475 million, implying an increase of roughly 15% year over year. 

The consensus estimate for net realized performance income and net realized principal investment income is pegged at $83.7 million and $187.7 million, respectively. In the first quarter of 2024, KKR generated $78 million of realized performance revenues and $114.5 million of net realized investment income.

Talking about expenses, KKR is likely to have experienced elevated expenses in the to-be-reported quarter due to higher employee compensation and benefits, along with increased investment in technological development to align with changing customer needs.

What Our Model Predicts for KKR

Our quantitative model does not conclusively predict an earnings beat for KKR this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for KKR is +0.31%.

Zacks Rank: The company currently carries a Zacks Rank #5 (Strong Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Finance Stocks Worth Considering

Here are a couple of finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time:

The Earnings ESP for UBS Group AG UBS is +6.02%, and it carries a Zacks Rank #3 at present. The company is slated to report first-quarter 2025 results tomorrow. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Over the past 30 days, the Zacks Consensus Estimate for UBS’ quarterly earnings has been revised 7.7% upward to 42 cents per share.

Tradeweb Markets TW is also scheduled to release first-quarter 2025 numbers tomorrow. The company has an Earnings ESP of +0.04% and carries a Zacks Rank #3 at present.

Quarterly earnings estimates for TW have been revised 1.2% upward to 85 cents per share over the past month.

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This article originally published on Zacks Investment Research (zacks.com).

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