Reviewing Great Elm Capital (GECC) and KKR & Co Inc (KKR)

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Great Elm Capital (NASDAQ:GECC) and KKR & Co Inc (NYSE:KKR) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, earnings, dividends, institutional ownership, profitability, analyst recommendations and risk.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Great Elm Capital and KKR & Co Inc, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Great Elm Capital 0 1 0 0 2.00
KKR & Co Inc 0 3 9 0 2.75

KKR & Co Inc has a consensus price target of $30.30, indicating a potential upside of 30.78%. Given KKR & Co Inc’s stronger consensus rating and higher possible upside, analysts plainly believe KKR & Co Inc is more favorable than Great Elm Capital.

Institutional and Insider Ownership

6.5% of Great Elm Capital shares are held by institutional investors. Comparatively, 73.2% of KKR & Co Inc shares are held by institutional investors. 0.3% of Great Elm Capital shares are held by company insiders. Comparatively, 39.3% of KKR & Co Inc shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Great Elm Capital and KKR & Co Inc’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Great Elm Capital $29.73 million 2.93 -$2.75 million $1.52 5.38
KKR & Co Inc $2.40 billion 5.15 $1.13 billion $1.93 12.01

KKR & Co Inc has higher revenue and earnings than Great Elm Capital. Great Elm Capital is trading at a lower price-to-earnings ratio than KKR & Co Inc, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Great Elm Capital and KKR & Co Inc’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Great Elm Capital 27.93% 14.91% 7.11%
KKR & Co Inc 48.08% 6.95% 3.23%

Dividends

Great Elm Capital pays an annual dividend of $1.00 per share and has a dividend yield of 12.2%. KKR & Co Inc pays an annual dividend of $0.50 per share and has a dividend yield of 2.2%. Great Elm Capital pays out 65.8% of its earnings in the form of a dividend. KKR & Co Inc pays out 25.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk & Volatility

Great Elm Capital has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, KKR & Co Inc has a beta of 1.66, meaning that its stock price is 66% more volatile than the S&P 500.

Summary

KKR & Co Inc beats Great Elm Capital on 13 of the 16 factors compared between the two stocks.

About Great Elm Capital

Great Elm Capital Corporation is a business development company which specializes in loan and mezzanine, middle market investments. The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment. It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.

About KKR & Co Inc

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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