Blue Owl Capital Stock (OWL) Strong Growth and Good Value in Q1 2025

Blue Owl Capital (NYSE: OWL) continues to impress with robust growth and attractive valuation, particularly as evidenced by its Q1 2025 results. With soaring revenue and solid free cash flow margins, the asset manager is demonstrating both resilience and scalability. Despite a shortfall in GAAP EPS, nuanced performance metrics and favorable analyst forecasts indicate that OWL could represent a rare blend of strength and value in the alternatives space. In this article we will dive into Blue Owl Capital recent earnings, stock performance & valuation, growth potential, and the risks investor should consider.

About Blue Owl Capital

Founded in 2021 through a merger of Owl Rock and Dyal Capital, Blue Owl Capital has quickly emerged as a dominant alternative asset manager. It offers private capital solutions across three core platforms: private credit, GP strategic capital, and real assets. As of March 31, 2025, its Assets Under Management (AUM) topped a staggering $273 billion, positioning OWL as a leader in private market infrastructure.

Blue Owl Financial Performance

In Q1 2025, Blue Owl Capital reported strong revenue growth, with quarterly revenue reaching $683.49 million, a 33.2% increase from $513.34 million in Q1 2024. However, GAAP EPS declined 75%, dropping to $0.01 from $0.04 in the same period last year. On a trailing twelve-month (TTM) basis, revenue rose 33%, from $1.85 billion to $2.46 billion, while EPS (TTM) increased 23.81%, from $0.13 to $0.16, reflecting underlying earnings momentum despite the quarterly dip. Meanwhile, Free Cash Flow per Share (TTM) declined by 9.04%, from $1.66 to $1.51, suggesting some short-term pressure on cash generation. The company maintains solid profitability, with a gross profit margin of 59.11%, net profit margin of 3.73%, and a strong free cash flow margin of 36.44%. Efficiency metrics remain healthy, with Return on Assets (ROA) at 4.65% and Return on Equity (ROE) at 5.95%, while the debt-to-equity ratio stands at a moderate 0.56, indicating prudent capital structure.

Over the past five years, Blue Owl Capital has been growing its revenue at a 71.4% CAGR and its free cash flow at 246.3%, while net income has remained positive but fluctuated.

Blue Owl Fiscal 2025 Financial Forecast

Looking ahead, analysts forecast 2025 revenue to reach $2.69 billion, a 23.79% increase from $2.17 billion in 2024, and project non-GAAP EPS of $0.85, up 9.89% from $0.77 in 2024. The stock carries a “Buy” rating, with an average price target of $22.67, implying 15.84% upside, and a high target of $28, representing a potential 43.13% upside, signaling strong confidence in Blue Owl's continued performance.

OWL Stock Price Performance and Valuation

At the time this article was written, the stock was trading at $19.57, Blue Owl Capital has delivered a 10.5% gain over the past year, slightly underperforming the S&P 500, which rose 13.4% in the same period. However, over the longer term, the stock has shown strong performance, climbing 81% since IPO in May 2021, outperforming the S&P 500’s 69.4% gain. 

The stock also offers an attractive dividend yield of 4.64%, providing investors with additional return. From a valuation perspective, Blue Owl trades at a TTM price-to-sales (P/S) ratio of 4.63 and a forward P/S of 4.56, which is reasonable given its strong double-digit revenue growth. Its non-GAAP price-to-earnings (P/E) ratio stands at 24.77, with a forward P/E of 23.13, reflecting expectations of continued earnings expansion. While The price-to-free-cash-flow (P/FCF) ratio is 12.9.

Based on Fiscal.ai data, if we look at the valuation since 2021, the forward P/S is above the average, while the forward P/E and P/FCF are below the average. This suggests that the stock is potentially undervalued, as it is projected to grow rapidly in the future.

Blue Owl Growth Potential

Blue Owl growth prospect remains strong, driven by several factors.

• Strong Revenue Growth and Expansion
  Blue Owl Capital's Q1 2025 results showcase remarkable expansion across key metrics. The company achieved 33% revenue growth to $683.5 million compared to Q1 2024, while management fees increased 35% to $604.2 million. Fee-related earnings (FRE) reached $345.4 million, representing a 19% increase from the prior year quarter. Most notably, the company has maintained 16 consecutive quarters of both FRE management fee and FRE sequential growth, demonstrating consistent operational excellence.
  The most striking indicator of Blue Owl's growth trajectory is its 57% increase in assets under management (AUM) to $273.3 billion as of March 31, 2025, up from $174.3 billion in the prior year. Fee-paying AUM experienced even more dramatic growth of 66% to $174.6 billion. This expansion was primarily driven by strategic acquisitions including Kuvare, IPI Partners, Prima Capital, and Atalaya Capital Management, along with organic capital raising and appreciation across the business.
• Strategic Expansion Through Acquisitions
  Blue Owl completed several transformative acquisitions that significantly enhanced its market position. The IPI Partners acquisition, which closed on January 3, 2025, added approximately $14.2 billion in AUM and $10.7 billion in fee-paying AUM, establishing Blue Owl as a major player in the digital infrastructure space. IPI operates one of the largest private digital infrastructure portfolios with 82 data centers comprising over 2.2GWs of leased capacity across the US, EMEA, and APAC.
  The Atalaya Capital Management acquisition completed in September 2024 added over $10 billion in alternative credit AUM, positioning Blue Owl in the rapidly growing asset-based finance market estimated at over $11 trillion. This acquisition provides Blue Owl with expertise in consumer and commercial finance, corporate and real estate assets, and alternative credit strategies.
• Platform-Specific Growth Potential
  The Credit platform, Blue Owl's largest segment with $139.2 billion in AUM (53% increase year-over-year), continues to demonstrate strong performance. Direct lending originations reached $12.8 billion in Q1 2025 with net deployment of $4.5 billion. The platform achieved gross returns of 3.1% for direct lending and 6.1% for alternative credit in Q1 2025. With $16.7 billion in AUM not yet paying fees, the Credit platform has substantial embedded growth potential representing $228 million in expected annual management fees once deployed.
  The Real Assets platform experienced exceptional growth with AUM increasing 146% to $67.1 billion and fee-paying AUM surging 195% to $43.9 billion. This dramatic expansion was driven by the IPI, Prima, and Kuvare acquisitions, along with strong capital raising in real estate investment trusts and digital infrastructure products. The platform's diversification across net lease, digital infrastructure, and real estate credit provides multiple growth vectors.

Risks to Consider

While OWL stock fundamental looks strong, we should beware of potential risks.

• Financial and Dividend Risks
  The company has been paying out relatively high dividends instead of building a financial cushion, which could leave it vulnerable to future economic downturns or market stress. Lower interest rates (SOFR) expected in 2025 and 2026 may hurt earnings. Additionally, the firm’s fee revenue depends heavily on the performance and listing status of its Business Development Companies (BDCs). If these BDCs do not become publicly listed as anticipated or perform poorly, Blue Owl’s advisory fees and revenues could decline significantly.
• Operational Risks from Acquisitions
  Blue Owl's growth strategy relies heavily on acquisitions, such as the recent acquisition of IPI Partners and Atalaya Capital Management. These deals introduce integration challenges and operational risks, including potential inefficiencies or failure to align acquired entities with Blue Owl’s culture and standards, which could dilute brand value or hinder anticipated synergies.
• Exposure to Private Credit Risks
  Blue Owl’s direct lending and private credit strategies, while offering high yields, carry risks such as potential defaults, especially if private credit default rates spike. Failures in due diligence, deal structuring, or active portfolio management could lead to significant losses. Additionally, lower Secured Overnight Financing Rates (SOFR) in 2025 and 2026 could reduce earnings from floating-rate loans.

Conclusion

Blue Owl Capital demonstrates a solid blend of growth, income, and value. With strong revenue momentum, high-margin operations, and a generous dividend yield, the company offers compelling long-term potential. Despite short-term earnings fluctuations, its consistent asset growth, scalable platform, and analyst confidence support a positive outlook. Trading at reasonable valuation multiples with room for upside, OWL remains a strong candidate for investors seeking exposure to alternative asset management with both income and capital appreciation opportunities.