Is Blue Owl Capital's Strategic Moves Creating an Opportunity After Wild Price Swings?

• Wondering if Blue Owl Capital is a bargain right now? Let’s take a closer look at its value to help you decide if this stock deserves a spot on your radar.
• The stock has seen a wild ride, rising 6.9% over the last week but declining 9.4% in the past month and 36.4% year-to-date. This indicates shifting sentiment and potential opportunities for those paying attention.
• This turbulence comes amid growing investor interest in alternative asset managers and a steady stream of headlines about the company's strategic moves, such as its recent expansion into credit markets and high-profile partnership announcements. These developments have fueled both optimism for future growth and new questions about risk and competitive positioning in the sector.
• On a valuation basis, Blue Owl Capital currently scores 2 out of 6, which means it is considered undervalued by only a couple of our key metrics. Up next, we will dig into each valuation approach to show how these scores are calculated and hint at an even more powerful way to spot potential value at the end of this article.

Blue Owl Capital scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Blue Owl Capital Excess Returns Analysis

The Excess Returns model evaluates a company's profitability by examining how much earnings exceed the true cost of equity capital. It focuses on how efficiently Blue Owl Capital generates profits on invested equity, which can provide critical insight into long-term value beyond standard profit metrics.

Key data points for Blue Owl Capital include:

• Book Value: $3.45 per share
• Stable EPS: $0.14 per share
  (Source: Median Return on Equity from the past 5 years.)
• Cost of Equity: $0.30 per share
• Excess Return: $-0.16 per share
• Average Return on Equity: 4.07%
• Stable Book Value: $3.50 per share
  (Source: Median Book Value from the past 5 years.)

According to this model, Blue Owl Capital is producing returns below its cost of equity, resulting in a negative excess return. The calculated intrinsic value is significantly lower compared to the current share price, with the stock estimated to be approximately 2683.5% overvalued based on this assessment. This suggests investors should be highly cautious, as the current share price does not appear supported by underlying profitability or equity efficiency.

Result: OVERVALUED

Our Excess Returns analysis suggests Blue Owl Capital may be overvalued by 2683.5%. Discover 920 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Blue Owl Capital.

Approach 2: Blue Owl Capital Price vs Sales

For companies like Blue Owl Capital, which are not yet highly profitable by traditional measures but generate significant revenue, the Price-to-Sales (P/S) multiple is often the most suitable valuation metric. The P/S ratio helps investors assess how a company's market valuation compares to its sales, offering a relatively stable metric even if earnings are still growing or volatile.

Growth expectations and risk play a major role in determining what counts as a “fair” P/S ratio. Fast-growing companies or those with lower risk profiles typically warrant higher multiples. In contrast, slower growth or higher uncertainty can justify lower ratios. By comparing a company's P/S ratio to industry norms, we gain insight into how investors are pricing growth potential and business risks.

Currently, Blue Owl Capital trades at a P/S multiple of 3.63x. This is almost exactly in line with its peer average of 3.62x and a bit lower than the industry average of 3.76x. However, Simply Wall St’s proprietary “Fair Ratio” for the stock comes in at 3.91x. The Fair Ratio is more insightful than just relying on peer or sector averages because it tailors the expected valuation based on Blue Owl’s specific business profile, including its growth outlook, profit margin, market cap, risk factors, and industry dynamics.

With the stock’s current P/S multiple just below its Fair Ratio, Blue Owl Capital appears slightly undervalued by this measure.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Blue Owl Capital Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a practical, story-based perspective you create about a company, blending your view of its outlook with actual numbers like future revenue, earnings, and margins to estimate fair value over time. Narratives connect the events, strategy, risks, and opportunities you believe are most important for Blue Owl Capital directly to a financial forecast and then to a fair value that helps drive your investment decisions.

On Simply Wall St’s Community page, millions of investors use Narratives as an easy, accessible tool to clarify when to buy or sell by comparing their calculated Fair Value to the current share price. As company news or earnings are released, Narratives and fair value estimates update automatically, always reflecting fresh information. For Blue Owl Capital, you might find a Narrative projecting significant upside from booming private credit and data center investments, setting a fair value as high as $29.00, while another investor could focus on integration risks and set theirs as low as $21.00. This empowers each user to follow their own story and strategy confidently.

Do you think there's more to the story for Blue Owl Capital? Head over to our Community to see what others are saying!

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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