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By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. For example, the KKR & Co. Inc. (NYSE:KKR) share price is up 95% in the last three years, clearly besting the market return of around 40% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 44% , including dividends .
Check out our latest analysis for KKR
We don't think that KKR's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 3 years KKR saw its revenue shrink by 15% per year. The revenue growth might be lacking but the share price has gained 25% each year in that time. Unless the company is going to make profits soon, we would be pretty cautious about it.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on KKR
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for KKR the TSR over the last 3 years was 109%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that KKR shareholders have received a total shareholder return of 44% over the last year. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 17% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand KKR better, we need to consider many other factors. Even so, be aware that KKR is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...