What is KKR's Intrinsic value?

KKR & Co Inc (KKR) Intrinsic Value Analysis

Executive Summary

As of June 9, 2025, KKR & Co Inc's estimated intrinsic value ranges from $20.23 to $150.05 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $105.41 -14.6%
Discounted Cash Flow (5Y) $20.23 -83.6%
Dividend Discount Model (Multi-Stage) $150.05 +21.6%
Dividend Discount Model (Stable) $72.23 -41.5%

Is KKR & Co Inc (KKR) undervalued or overvalued?

With the current market price at $123.40, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate KKR & Co Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.66 0.82
Cost of equity 6.9% 9.5%
Cost of debt 5.0% 23.9%
Tax rate 10.3% 12.9%
Debt/Equity ratio 0.45 0.45
After-tax WACC 6.1% 13.0%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 9.6% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $25,322 (FY12-2024) to $87,597 (FY12-2034)
  • Net profit margin expansion from 19% to 35%
  • Capital expenditures maintained at approximately 1% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $20 $50,013M 84.9%
10-Year Growth $105 $125,879M 73.6%
5-Year EBITDA $11 $41,737M 81.9%
10-Year EBITDA $89 $110,918M 70.1%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 28.1%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.2%
  • Long-term growth rate: 4.0%
  • Fair value: $150.05 (21.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.5% (Low) to 6.9% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $27 to $118
  • Selected fair value: $72.23 (-41.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $109905M
Enterprise Value $141901M
Trailing P/E 49.77
Forward P/E 48.01
Trailing EV/EBITDA 12.80
Current Dividend Yield 56.55%
Dividend Growth Rate (5Y) 14.68%
Debt-to-Equity Ratio 0.45

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 33% $31.62
Discounted Cash Flow (5Y) 28% $5.06
Dividend Discount Model (Multi-Stage) 22% $30.01
Dividend Discount Model (Stable) 17% $10.83
Weighted Average 100% $86.14

Investment Conclusion

Based on our comprehensive valuation analysis, KKR & Co Inc's weighted average intrinsic value is $86.14, which is approximately 30.2% below the current market price of $123.40.

Key investment considerations:

  • Strong projected earnings growth (19% to 35% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 14.68%

Given these factors, we believe KKR & Co Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.