Should You Sell OWL Stock at 9.24X Earnings and a 22.5-Cent Dividend?

Core Insights - Blue Owl Capital (OWL) has experienced a significant decline in stock price over the past year, raising concerns about its valuation and cash returns [1] - The stock is currently trading at a discounted earnings multiple compared to its peers, with management focusing on fundraising, deployment, and capital return [1][4] Valuation - Blue Owl is valued at 9.24X forward 12-month earnings, below the industry average of 12.58X [4] - Historically, OWL shares have traded between 30.26X and 9.24X over the past three years, with a five-year median of 19.24X [5] - Compared to larger alternative asset managers like Blackstone (16.05X) and Ares Management (15.25X), Blue Owl's valuation appears significantly lower [5] Financial Performance - In 2025, Blue Owl reported GAAP revenue of $2.87 billion, a 25% increase year-over-year, but diluted EPS fell to 10 cents from 20 cents in 2024 [13] - Fee-Related Earnings (FRE) reached $1.50 billion, up 19%, with a margin of 58.3% [13] - Management fees, the primary growth driver, increased to $2.52 billion, supported by higher fee-paying assets across various sectors [14] Cash Returns and Shareholder Value - Blue Owl declared a quarterly dividend of 22.5 cents per Class A share and repurchased 3.6 million shares for $52 million in Q4 [8][11] - The combination of dividends and share repurchases supports a total-return narrative, although ongoing fundraising and credit performance remain critical for long-term earnings sustainability [12] Future Outlook - Management anticipates 2026 fundraising to mirror 2025 levels, with initiatives like Digital Infrastructure Fund IV and evergreen wealth products expected to drive growth [15] - The company faces near-term challenges related to private credit liquidity and sentiment, including increased redemption requests and potential sector spillover [16]