Carlyle Group (CG) valuation check after weak earnings, revenue miss and peer-lagging quarterly performance

Carlyle Group (CG) just turned in a rough earnings report, with revenue down sharply year on year and both sales and EPS missing expectations, making it the weakest performer in its peer group.

See our latest analysis for Carlyle Group.

Even with the weak quarter, investors have mostly looked through the noise, with a 1 month share price return of 7.68% offsetting a softer 90 day move and backing up a hefty 3 year total shareholder return of 113.09%. This suggests longer term momentum remains broadly intact despite some near term nerves.

If results like Carlyle’s have you reassessing risk, it could be worth exploring fast growing stocks with high insider ownership as a way to spot other compelling ideas with aligned management incentives.

With revenues sliding, analyst expectations missed, and the stock still trading about 17% below consensus targets, the big question now is whether Carlyle is mispriced value or if the market is already factoring in future growth.

Most Popular Narrative: 14.2% Undervalued

With Carlyle Group closing at $55.79 versus a narrative fair value of $65, the story hinges on how fast earnings and margins can compound from here.

Surging institutional allocations to alternatives, reinforced by significant momentum in areas like private credit and asset-based finance (with AUM up 40% YoY), as well as a growing insurance channel (notably Fortitude Re and reinsurance flows), increasingly diversify Carlyle's revenue streams and enhance margins by providing higher recurring, stable fee income across cycles.

Read the complete narrative.

Curious how shrinking top line forecasts can still support rising earnings, fatter margins, and a premium multiple to today, without stretching assumptions too far?

Result: Fair Value of $65 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent competition and any stumble in fundraising or performance could quickly pressure margins and challenge the case for a higher multiple.

Find out about the key risks to this Carlyle Group narrative.

Another Angle on Valuation

On earnings, Carlyle looks far less forgiving. The stock trades at about 30.4 times earnings, compared to 23.8 times for the wider US Capital Markets group and a fair ratio of 18.9 times. That rich gap points to downside risk if sentiment or growth expectations fade.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Carlyle Group Narrative

If you see the story differently or want to test your own assumptions against the numbers, you can build a full narrative in minutes, Do it your way.

A great starting point for your Carlyle Group research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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