Economic Income For Apollo Global Comes In Way Above Estimates, Co. Using The Right Strategies

On August 3, Apollo Global Management APO reported 2Q16 after-tax economic income (ENI) of $0.98 per share vs. $0.38 from a year earlier. Analyst consensus expected Apollo to report and ENI of $0.20.

Argus' Stephen Biggar was almost as surprised as most analysts having a $0.37 ENI Q2 estimate. As a response to Apollo's sign of strength, Biggar raised Apollo's price target from $22 to $24 while maintaining a Buy rating.

Besides impressive ESI metrics showing Apollo's strength during market turbulence, the analyst was happy to see Apollo's strategic use of capital amidst declining asset values.

"We were impressed with the heavy capital deployment in 2Q as the recent downturn in asset values and the increase in distressed credits created investment opportunities, "stated the Argus analyst.

Overall, Apollo spent $5.9 billion in 2Q while saving $24.9 billion of dry power available for future investments.

A Sound Investment Strategy

As noted in the conference call, Apollo has been making an effort to deploy its best investments during times of market turbulence.

Biggar appreciated the strategy, saying it was "well suited to the current adverse market environment, in which many firms lack financing alternatives. We believe that the recent substantial deployment will fuel future monetizations."

As a result of strong growth forecasts and current investments, Biggar expected a distribution yield of about 8 percent this year.