Investment Thesis
Carlyle Group demonstrates strong profitability with 24.3% operating margin and substantial revenue growth of 2115.9% YoY, indicating successful asset management and fundraising activities. However, severely negative free cash flow of -3.4B and operating cash outflows of -3.3B raise critical concerns about working capital management and the sustainability of earnings quality, despite healthy debt metrics.
Strengths
- Exceptional revenue growth of 2115.9% YoY reflecting strong asset raising and market demand
- Solid profitability with 16.9% net margin and 24.3% operating margin demonstrating operational efficiency
- Manageable leverage at 0.92x debt-to-equity with strong 9.4x interest coverage ratio
- Substantial cash reserves of 2.0B providing liquidity cushion
Risks
- Severe negative free cash flow of -3.4B with -70.6% FCF margin indicating cash generation concerns despite reported profitability
- Significant operating cash flow deficit of -3.3B suggesting potential working capital timing issues or non-cash earnings recognition
- Diluted EPS declined 21.3% YoY despite flat net income growth, indicating share dilution and potential valuation pressure
- High insider activity with 31 Form 4 filings in 90 days warrants monitoring for potential insider selling or hedging
Key Metrics to Watch
- Operating cash flow trends and reconciliation with net income quality
- Free cash flow conversion and working capital management in subsequent quarters
- Assets under management (AUM) growth and fee-based revenue composition
- Share count trends and insider transaction directionality
Financial Metrics
Revenue
4.8B
Net Income
808.7M
EPS (Diluted)
$2.18
Free Cash Flow
-3.4B
Total Assets
29.1B
Cash
2.0B
Profitability Ratios
Gross Margin
N/A
Operating Margin
24.3%
Net Margin
16.9%
ROE
11.5%
ROA
2.8%
FCF Margin
-70.6%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.92x
Debt/Assets
75.8%
Interest Coverage
9.36x
Long-term Debt
6.5B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-22T05:48:11.341895 |
Data as of: 2025-12-31 |
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