Carlyle Group Inc. (CG): what the price requires

At today's price, Carlyle Group Inc. (CG) is priced for +13.1% earnings growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/CG

Headline

FieldValue
TickerCG
CompanyCarlyle Group Inc.
Current price$44.12/sh
CompositionGlobal Private Equity 55% / Global Credit 28% / Carlyle AlpInvest 17%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfee-financial
Price-to-earnings15.6x
Earnings yield6.4%

The GAAP earnings base is materially attributable to non-controlling interests; the implied growth and duration are suppressed as distorted. The multiple is the honest statement.

A hybrid: a fee franchise alongside a sizeable balance sheet, valued here on the fee annuity.

Solve inputs: computed at a 13.6% cost of equity with 4% terminal growth over a 5-year stage, on a 5-year median GAAP earnings base; each 1pp of cost of equity moves the implied earnings growth ~2.8pp.

Reconcile: at the x-ray's 9.3% required return this reads ~-1.4%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.37σ
cohort percentile (of 49 peers)20
sustained it ~5 years at this level44%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.56x4expensive
Earnings2.80x1expensive
Relative1.53x2expensive
Growth5.26x2expensive

Families that call it expensive: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.1%); the inversion above states its own rate.

Per-Model Detail (n=9)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noNegative/zero FCF — equity value floored at $0
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$24.971.77xyesP/E 17.1x (blended: static sector reference 12x + trailing (TTM) 29x), scenarios: 14.5x / 17.1x / 19.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth$5.198.50xyesStage 1: -29% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$16.452.68xyesBV/sh $15.04, ROE (TTM) 10.1%, ke 9.3%
Two-Stage Excess ReturnAsset$17.182.57xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$21.742.03xyesRev $4.1B, growth -8% (input: historical growth; tapered), Terminal P/S: 3.3x / 3.9x / 4.5x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$17.312.55xyesBV $15.04 + 5yr PV of (ROE (TTM) 10.1% − Kₑ 9.3%) × BV; BV grows 6.6%/yr
Graham NumberAsset$22.231.98xyes√(22.5 × EPS $1.46 × BVPS $15.04) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$1.2236.16xyesEPS $1.46 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$33.921.30xyesRevenue $4.06B × sector P/S 3.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$15.782.80xyesEPS $1.46 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-0.3%

Custody and consolidated-fund balance sheet: deposits, client cash, and fund-level debt are not corporate leverage, and operating cash flow follows client flows. Net-debt, coverage, and cash-burn lenses are suppressed as misleading; share-count CAGR is kept. The fee-earnings read above is the valuation basis.

Bullet Takeaways

Carlyle is a capital-light fee business, so it is worth the fee earnings it throws off rather than its book value. At $44.82 the price is about 16x earnings, a 6.3% earnings yield, which sits in the lower half of the alternative-asset-manager group and prices the firm to sustain its fee annuity.

The fee engine is the durable part: fee-related earnings of $300 million at a 47% margin in Q1 2026, on assets under management of $475 billion. The volatile part is distributable earnings, which fell to $0.89 per share from $1.14 a year earlier on unrealized performance reversals in certain funds.

The bet is on Carlyle hitting its path to $1.9 billion of fee-related earnings and $6-plus of distributable earnings per share by 2028.

Bull Case

The earnings story that matters for an alternative-asset manager is the fee-related line, and Carlyle's is growing. Fee-related earnings reached $300 million in Q1 2026 at a 47% margin, up from $290 million the prior quarter, and the 10-K shows the year-over-year build clearly, with FRE rising from $173.4 million at the end of 2024 on a $162.9 million increase in fee revenues (FY2025 10-K, accession 0001527166-26-000009). The filing defines the metric precisely as the recurring, annuity-like profit that 'adjusts DE to exclude net realized performance revenues' and other lumpy items, which is exactly why FRE is the right lens: it is the durable cash the management-fee business produces regardless of when investments are sold. Assets under management reached $475 billion, and fee-earning AUM, the slice that actually generates recurring fees, is the engine that compounds as the firm raises new funds.

The growth runway is fundraising, and it is healthy. Carlyle reported $13 billion of inflows in the quarter and $10 billion of deployment, with record U.S. buyout realizations. The 10-K describes fee-earning AUM as resting on long-duration limited-partner commitments 'once fees have been activated,' which means each successful fundraise locks in years of forward management fees. The shift toward perpetual and longer-dated capital, plus growth in Global Credit and the AlpInvest secondaries business, diversifies the firm away from reliance on traditional private-equity fund cycles and lengthens the duration of the fee annuity.

The third leg is the explicit plan and the discounted price. Management reiterated a path to $200 billion of inflows, $1.9 billion of fee-related earnings, and at least $6 of distributable earnings per share by year-end 2028. Against today's $0.89 quarterly DE run rate, that is a substantial step-up, and at a 6.3% earnings yield in the lower half of the peer group, the market is not paying a premium for it. The valuation methods understate the franchise because the GAAP earnings base is materially attributable to non-controlling interests, so the headline P/E overstates how much the equity holder pays for the fee stream. For a buyer who believes Carlyle executes toward its 2028 targets, a fee compounder trading at a discount to peers with a clear FRE growth path is an attractive entry.

Bear Case

The capital-allocation and earnings-quality concern is the gap between the steady fee story and the volatile reality of the reported numbers. Distributable earnings fell to $0.89 per share in Q1 2026 from $1.14 a year earlier, and the miss was driven by unrealized performance-allocation reversals in certain funds, notably the seventh U.S. buyout fund. That is the structural issue with the model: a large part of an alternative manager's economics comes from carried interest, which is recognized only when investments appreciate and realize, and which can reverse when marks move against the funds. The fee-related earnings are genuinely annuity-like, but the distributable earnings that fund the dividend and the buyback swing with markets, so the $6-plus DE target for 2028 depends on a benign realization environment that no one controls.

The second issue is that the 2028 plan is a promise the price is being asked to trust. Management has laid out $200 billion of inflows and $1.9 billion of FRE by year-end 2028, but fundraising is competitive and cyclical: limited partners allocate to private markets in waves, and a stretch of weak distributions (which Carlyle's own falling DE reflects) makes it harder to raise the next fund, because LPs fund new commitments partly from prior realizations. If the private-equity exit environment stays sluggish, the flywheel of realize-distribute-reraise slows, and the FRE growth that the bull case rests on decelerates with it. The firm has also worked through leadership transitions in recent years, and execution consistency against an ambitious multi-year target is not yet proven.

The third risk is what the valuation methods are signaling. The bull explanation is that the GAAP earnings base is depressed by non-controlling interests and understates the fee franchise, which is fair, but it requires looking past the reported numbers to a target three years out. The stock also carries a high beta, reflecting its sensitivity to both the equity markets that drive its marks and the credit conditions that affect deployment and exits. At a price that leans on the 2028 plan, any combination of slower fundraising, weaker realizations, or a market drawdown that reverses more performance marks would pressure both the DE that funds capital returns and the multiple the market is willing to pay. The fee annuity is real; the question is whether the price is paying for the annuity or for the aspiration.

Valuation

A capital-light fee business is valued on the earnings it throws off, not its book value, so Carlyle is read on price-to-earnings. At $44.82 (June 27, 2026) the price is about 16x earnings, a 6.3% earnings yield, computed at a 13.7% cost of equity on a five-year median GAAP earnings base. Crucially, the inversion did not resolve a specific implied growth rate, because the GAAP earnings base is materially attributable to non-controlling interests, which distorts the headline figure. The honest framing is qualitative: the price leans on Carlyle sustaining and modestly growing its fee annuity, and the multiple sits in the lower half of the alternative-asset-manager peer group.

The grounded valuation methods land below the price, which reflects the GAAP-earnings distortion more than a verdict that the franchise is overvalued. The earnings-power methods are effectively unusable here (Earnings Power Value near zero) because the GAAP earnings attributable to the firm are depressed. So the methods should be read with caution for this hybrid: a fee franchise with a sizeable balance sheet, valued here on the fee annuity where its franchise value sits. The real valuation question is whether the path to $1.9 billion of fee-related earnings and $6-plus of distributable earnings per share by 2028 is credible. If it is, a 6.3% earnings yield on a growing, discounted-to-peers fee compounder is cheap. If fundraising slows or realizations stay weak, the distributable earnings that fund the dividend and buyback fall short, and the lower-half multiple is appropriate rather than a bargain. The fee-related earnings give the floor; the carried interest and the 2028 plan provide the upside and the risk.

Catalysts

The Q1 2026 report was the recent catalyst and it was a tale of two metrics. Fee-related earnings of $300 million at a 47% margin and AUM of $475 billion showed the recurring engine working, while distributable earnings of $0.89 per share missed and fell from $1.14 a year earlier on unrealized performance reversals in certain funds, particularly the seventh U.S. buyout fund. The firm reported $13 billion of inflows, $10 billion of deployment, and record U.S. buyout realizations. The next quarters are a test of whether realizations recover and whether the FRE margin holds, since FRE is the durable metric and DE is the one that funds capital returns.

The forward catalysts center on the 2028 plan and the market backdrop. Management reiterated a path to $200 billion of inflows, $1.9 billion of FRE, and at least $6 of distributable earnings per share by year-end 2028, so fundraising flows, fee-earning AUM growth, and FRE margin progression are the quarterly checkpoints. The private-equity exit environment drives realizations and carried interest, and equity and credit market conditions move the fund marks that determine performance revenue. For a fee compounder priced in the lower half of its peer group, the catalysts that re-rate it are sustained inflows, a recovery in realizations and distributable earnings, and visible progress toward the 2028 targets; the risks are a fundraising slowdown, weak exits, or a market drawdown that reverses more performance marks.

Sources: Carlyle Q1 2026 AUM hits $475B despite earnings miss (Investing.com), Carlyle reports Q1 2026 financial results (IR), Carlyle Q1 2026 earnings call transcript (Motley Fool), Carlyle FY2025 10-K.

Peer Cohorts (Per Segment, With Filing Citations)

Global Private Equity (reported)

Global Credit (reported)

Carlyle AlpInvest (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive CG report on boothcheck