The Carlyle Group Inc.

Based on a comprehensive analysis of Carlyle Group (CG), the stock presents a compelling but high-risk opportunity for investors comfortable with volatility.

Technically, the sharp recent decline from its 52-week high suggests selling pressure may be nearing exhaustion, offering a potential entry point in the lower-mid range of its yearly trading band. Fundamentally, while operational efficiency metrics like ROE are modest, the company demonstrated a powerful rebound in Q4 profitability with a net margin of 19.4%, indicating underlying earnings potential. The valuation is mixed; a mid-teens P/E ratio seems reasonable, but the extremely high EV/EBITDA warrants skepticism, though the lack of peer data makes a definitive call difficult. The primary concern is the stock's extreme volatility (Beta > 2.0), which signifies it will amplify broader market swings.

Recommendation: CAUTIOUS BUY CG is worth buying for investors seeking a turnaround play with significant upside potential, contingent on a high tolerance for risk. The improved Q4 profitability and current technical position after a steep decline provide a favorable setup. However, this recommendation is heavily tempered by the stock's extreme volatility and modest operational efficiency, requiring a cautious approach with appropriate position sizing. It is best suited for a speculative portion of a diversified portfolio.

*Disclaimer: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for The Carlyle Group (CG):

12-Month Outlook for CG

The primary catalyst for CG is the potential continuation of its Q4 profitability rebound, particularly in its net margin, which could signal a successful turnaround if sustained. However, the stock faces significant risk from its extreme volatility (Beta > 2.0), meaning its performance will be heavily influenced by broader market sentiment and economic conditions. With no specific analyst target price available, the outlook is highly speculative; investors should focus on the stock's technical position after its recent sharp decline as a potential entry point, but must be prepared for substantial price swings. This profile makes CG suitable only for the speculative portion of a well-diversified portfolio.

Wall Street Consensus

Most Wall Street analysts are optimistic about The Carlyle Group Inc.'s 12-month outlook, with consensus target around $52.98, indicating expected upside potential.

Overall, CG has investment potential but also faces challenges. Here are key factors to weigh before investing.

CG has demonstrated exceptionally volatile performance with significant price swings over the past year, resulting in net negative returns. The stock's high beta confirms its extreme sensitivity to market fluctuations.

The stock has declined sharply over the past month, significantly underperforming the broader market. While the three-month performance appears relatively flat, it still reflects modest underperformance compared to market benchmarks, emphasizing recent weakness.

Currently trading approximately 21.5% below its 52-week high, the stock is positioned in the lower-mid range of its yearly spectrum. While not at oversold extremes, the substantial recent decline from near-peak levels suggests the selling pressure may be approaching exhaustion, though the high volatility warrants caution.

Revenue & Profitability CG demonstrates volatile performance with Q4 revenue of $1.84 billion far exceeding Q3's $781 million, reflecting significant quarterly fluctuations. Profitability improved markedly, with Q4 net profit margin reaching 19.4% compared to just 0.1% in Q3, driven by stronger gross margins and controlled operating expenses relative to revenue growth.

Financial Health The company maintains moderate leverage with a debt ratio of 49.3% and debt-to-equity of 2.04, though long-term debt constitutes 66.3% of capitalization. Cash position appears adequate with a cash ratio of 0.47, but absent cash flow data limits full assessment of liquidity and debt service capabilities.

Operational Efficiency Operational metrics show room for improvement with ROE at 5.1% and asset turnover of just 0.06, indicating suboptimal utilization of assets to generate revenue. The fixed asset turnover of 3.31 suggests reasonable efficiency in deploying fixed assets, though overall capital efficiency remains modest relative to equity multiplier of 4.13.

Valuation Level: Based on the provided metrics, CG appears to have a mixed valuation profile. The TTM and forward PE ratios in the mid-teens suggest a reasonable valuation relative to broad market averages. However, the significantly elevated EV/EBITDA ratio of 65.2 indicates potential overvaluation when considering the company's capital structure and operational earnings before non-cash charges. The negligible PEG ratio, if accurate, would traditionally signal deep undervaluation on a growth-adjusted basis, but such an extreme figure may warrant scrutiny regarding the quality of the underlying growth projection.

Peer Comparison: A conclusive peer comparison cannot be performed as industry average data is unavailable. The absence of sector-specific benchmarks for PE, PB, EV/EBITDA, and PEG ratios prevents any meaningful assessment of whether CG's valuation multiples represent a premium or discount to its competitors. Analysis would be significantly enhanced by obtaining relevant industry comparables to contextualize these standalone metrics.

Volatility Risk: The stock exhibits significant volatility risks evidenced by a Beta of 2.044, indicating it is about twice as volatile as the broader market. This high sensitivity is compounded by a substantial one-year maximum drawdown of -34.93%, reflecting considerable price downside experienced recently.

Other Risks: While the absence of short interest suggests limited speculative pressure from bears, this lack of negative sentiment does not eliminate other potential risks. The combination of high volatility and dramatic drawdowns still requires careful monitoring for liquidity events or fundamental challenges.