Critical Review: AFC Gamma (NASDAQ:AFCG) and KKR & Co. Inc. (NYSE:KKR)

AFC Gamma (NASDAQ:AFCG) and KKR & Co. Inc. (NYSE:KKR) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, dividends, risk, institutional ownership, analyst recommendations, earnings and profitability.

Analyst Recommendations

This is a summary of recent recommendations and price targets for AFC Gamma and KKR & Co. Inc., as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AFC Gamma	1	1	0	0	1.50
KKR & Co. Inc.	0	4	17	0	2.81

KKR & Co. Inc. has a consensus price target of $123.58, indicating a potential upside of 28.27%. Given KKR & Co. Inc.’s stronger consensus rating and higher probable upside, analysts clearly believe KKR & Co. Inc. is more favorable than AFC Gamma.

Volatility & Risk

AFC Gamma has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, KKR & Co. Inc. has a beta of 1.72, meaning that its share price is 72% more volatile than the S&P 500.

Institutional and Insider Ownership

26.5% of AFC Gamma shares are held by institutional investors. Comparatively, 76.3% of KKR & Co. Inc. shares are held by institutional investors. 30.7% of AFC Gamma shares are held by insiders. Comparatively, 23.2% of KKR & Co. Inc. shares are held by 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 AFC Gamma and KKR & Co. Inc.”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AFC Gamma	$24.82 million	2.90	-$20.67 million	$0.19	16.68
KKR & Co. Inc.	$19.46 billion	4.44	$2.37 billion	$3.14	30.68

KKR & Co. Inc. has higher revenue and earnings than AFC Gamma. AFC Gamma 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 AFC Gamma and KKR & Co. Inc.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AFC Gamma	15.64%	2.85%	1.50%
KKR & Co. Inc.	14.41%	5.88%	1.07%

Dividends

AFC Gamma pays an annual dividend of $0.20 per share and has a dividend yield of 6.3%. KKR & Co. Inc. pays an annual dividend of $0.78 per share and has a dividend yield of 0.8%. AFC Gamma pays out 105.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KKR & Co. Inc. pays out 24.8% of its earnings in the form of a dividend. KKR & Co. Inc. has raised its dividend for 5 consecutive years.

Summary

KKR & Co. Inc. beats AFC Gamma on 13 of the 17 factors compared between the two stocks.

About AFC Gamma

AFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other various commercial real estate loans and debt securities for established companies operating in the cannabis industry. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. The company has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. AFC Gamma, Inc. was incorporated in 2020 and is based in West Palm Beach, Florida.

About KKR & Co. Inc.

KKR & Co., Inc. operates as an investment firm. It offers alternative asset management as well as capital markets and insurance solutions. The firm’s business segments include Asset Management and Insurance Business. The Asset Management segment engages in providing private equity, real assets, credit and liquid strategies, capital markets, and principal activities. The Insurance Business segment offers retirement, life insurance and reinsurance solutions to clients across individual and institutional markets. The company was founded by Henry Kravis, George R. Roberts, and Jerome Kholberg on May 1, 1976 and is headquartered in New York, NY.