Critical Contrast: Oaktree Capital Group (OAK) vs. KKR & Co. L.P. Unit (KKR)

Oaktree Capital Group (NYSE: OAK) and KKR & Co. L.P. Unit (NYSE:KKR) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Dividends

Oaktree Capital Group pays an annual dividend of $3.84 per share and has a dividend yield of 9.3%. KKR & Co. L.P. Unit pays an annual dividend of $0.68 per share and has a dividend yield of 2.9%. Oaktree Capital Group pays out 96.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KKR & Co. L.P. Unit pays out 28.6% of its earnings in the form of a dividend. Oaktree Capital Group has increased its dividend for 2 consecutive years. Oaktree Capital Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations for Oaktree Capital Group and KKR & Co. L.P. Unit, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oaktree Capital Group 0 5 1 0 2.17
KKR & Co. L.P. Unit 0 3 7 0 2.70

Oaktree Capital Group presently has a consensus target price of $49.40, suggesting a potential upside of 19.18%. KKR & Co. L.P. Unit has a consensus target price of $26.50, suggesting a potential upside of 12.15%. Given Oaktree Capital Group’s higher possible upside, research analysts clearly believe Oaktree Capital Group is more favorable than KKR & Co. L.P. Unit.

Institutional & Insider Ownership

26.1% of Oaktree Capital Group shares are held by institutional investors. Comparatively, 68.9% of KKR & Co. L.P. Unit shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Oaktree Capital Group has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500. Comparatively, KKR & Co. L.P. Unit has a beta of 1.6, indicating that its stock price is 60% more volatile than the S&P 500.

Profitability

This table compares Oaktree Capital Group and KKR & Co. L.P. Unit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Oaktree Capital Group 15.11% 12.90% 2.97%
KKR & Co. L.P. Unit 30.30% 7.96% 3.42%

Earnings & Valuation

This table compares Oaktree Capital Group and KKR & Co. L.P. Unit’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Oaktree Capital Group $1.47 billion 4.43 $231.49 million $3.97 10.44
KKR & Co. L.P. Unit $3.28 billion 3.58 $1.02 billion $2.38 9.93

KKR & Co. L.P. Unit has higher revenue and earnings than Oaktree Capital Group. KKR & Co. L.P. Unit is trading at a lower price-to-earnings ratio than Oaktree Capital Group, indicating that it is currently the more affordable of the two stocks.

Summary

KKR & Co. L.P. Unit beats Oaktree Capital Group on 9 of the 16 factors compared between the two stocks.

About Oaktree Capital Group

Oaktree Capital Group, LLC operates as a global investment management firm that focuses on alternative markets. It manage investments in a number of strategies within six asset classes, including distressed debt; corporate debt, including high yield debt and senior loans; control investing; convertible securities; real estate; and listed equities. The company pursues these strategies through closed-end, open-end, and evergreen funds. Oaktree Capital Group, LLC was incorporated on May 15, 2007 and is headquartered in Los Angeles, California.

About KKR & Co. L.P. Unit

KKR & Co. L.P. is a private equity and real estate investment firm specializing in direct and fund of fund investments. It specializes in acquisitions, leveraged buyouts, management buyouts, credit special situations, growth equity, mature, mezzanine, distressed, turnaround, and middle market investments. The firm considers investments in all industries with a focus on software, security, semiconductors, consumer electronics, internet of things (iot), internet, information services, information technology infrastructure, financial technology, network and cyber security architecture, engineering and operations, content, technology and hardware, energy and infrastructure, real estate, services industry with a focus on business services, intelligence, industry-leading franchises and companies in natural resource, containers and packaging, agriculture, airports, ports, forestry, electric utilities, textiles, apparel and luxury goods, household durables, digital media, insurance, brokerage houses, non-durable goods distribution, supermarket retailing, grocery stores, food, beverage, and tobacco, hospitals, entertainment venues and production companies, publishing, printing services, capital goods, financial services, specialized finance, pipelines, and renewable energy. In energy and infrastructure, it focuses on the upstream oil and gas and equipment, minerals and royalties and services verticals. In real estate, the firm seeks to invest in private and public real estate securities including property-level equity, debt and special situations transactions and businesses with significant real estate holdings, and oil and natural gas properties. The firm also invests in asset services sector that encompasses a broad array of B2B, B2C and B2G services verticals including asset-based, transport, logistics, leisure/hospitality, resource and utility support, infra-like, mission-critical, and environmental services. Within Americas, the firm prefers to invest in consumer products; chemicals, metals and mining; energy and natural resources; financial services; healthcare; industrials; media and communications; retail; and technology. Within Europe, the firm invests in consumer and retail; energy; financial services; health care; industrials and chemicals; media and digital; and telecom and technologies. Within Asia, it invests in consumer products; energy and resources; financial services; healthcare; industrials; logistics; media and telecom; retail; real estate; and technology. The firm seeks to invest in mid to high-end residential developments, but can invest in other projects throughout Mainland China through outright ownership, joint ventures, and merger. It invests globally with a focus on Australia, emerging and developed Asia, Middle East and Africa, Nordic, Southeast Asia, Asia Pacific, Ireland, Hong Kong, Japan, Taiwan, India, Vietnam, Malaysia, Singapore, Indonesia, France, Germany, Netherlands, United Kingdom, Caribbean, Mexico, South America, North America, Brazil, Latin America, Korea with a focus on South Korea, and United States of America. In the United States and Europe, the firm focuses on buyouts of large, publicly traded companies. It seeks to invest $30 million to $717 million in companies with enterprise values between $500 million to $2389 million. The firm prefers to invest in a range of debt and public equity investing and may co-invest. It seeks a board seat in its portfolio companies and a controlling ownership of a company or a strategic minority positions. The firm may acquire majority and minority equity interests, particularly when making private equity investments in Asia or sponsoring investments as part of a large investor consortium. The firm typically holds its investment for a period of five to seven years and more and exits through initial public offerings, secondary offerings, and sales to strategic buyers. KKR & Co. L.P. was founded in 1976 and is based in New York, New York with additional offices across North America, Europe, Australia, and Asia.

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