The Carlyle Group (CG) — a private equity giant — hit a rough patch the past year, with a pullback of over 38% as high interest rates and weak global equity markets resulted in a slowdown in dealmaking, recalls notes Todd Shaver, editor of Bull Market Report.
The firm released its third-quarter results two months ago, reporting $1.4 billion in revenue, down 8% YoY, compared to $1.5 billion a year ago. The company posted a profit of $210 million, or $1.42 per share, down from $150 million, or $1.54 per share during the same period last year.
As a result, the group’s realized performance revenue dropped to $760 million, down 24% YoY from $1.0 billion a year ago, owing to a substantial slowdown in divestments across its portfolios and business segments.
The firm, however, continued its streak of investments, with $10.5 billion in fresh deployments during the quarter, bringing the YTD figure to $28 billion. The firm’s private equity funds appreciated by 1%, followed by real estate and infrastructure funds at 2% and 8%, respectively.
The Carlyle Group raised $6 billion in fresh capital during the quarter, taking total assets under management (AUM) to $370 billion. The firm currently maintains $74 billion in total unspent capital waiting to be deployed.
Despite headwinds in the short-term, private equity as a sector is set to scale new heights with the advent of perpetual capital vehicles and a growing range of products for retail investors. Following the pullback last year, the stock has been trending upward in recent weeks, trading at just 3 times sales and 7 times earnings with $1.6 billion in cash, $8.3 billion in debt, and $230 million in cash flow.
Carlyle has always been an under-the-radar company. It was beaten up in 2022 and as the economy rallies, so will the company and the stock. Our target is $60 and while we’re not going to see that level for a while, later this year or next is certainly in the cards for this great private equity stalwart.
