Over the last six months, Carlyle’s shares have sunk to $52.93, producing a disappointing 8.9% loss - a stark contrast to the S&P 500’s 5.8% gain. This may have investors wondering how to approach the situation.
Is there a buying opportunity in Carlyle, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is Carlyle Not Exciting?
Even with the cheaper entry price, we're sitting this one out for now. Here is one reason why CG doesn't excite us and a stock we'd rather own.
Lackluster Revenue Growth
Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. Carlyle’s recent performance shows its demand has slowed as its annualized revenue growth of 7% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
Final Judgment
Carlyle isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 12.2× forward P/E (or $52.93 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better stocks to buy right now. We’d recommend looking at a safe-and-steady industrials business benefiting from an upgrade cycle.
Stocks We Would Buy Instead of Carlyle
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