Apollo pairs 25% fee earnings growth with a $1T origination flywheel. At $115.30 the shares price a cyclical, not a compounder. I see 15% upside to $133 on $9.84 of 2027 earnings.
Key points
- $785M record fee earnings in Q2 FY26 grew 25% with a 58.5% margin on $1.05T of assets.
- $375M early Q3 alt income at a 10% return trails the 11% needed for the 10% spread earnings guide.
- $74B quarterly originations plus $50B signed but not closed fund future fees and Athene spreads.
The call
The $115.30 price values Apollo at about 11.7 times my $9.84 of 2027 adjusted earnings per share. That multiple treats the fee business like a cyclical broker and gives little credit for $62B of committed capital worth about $400M of future annual fees.
I see a fee compounder with an insurance engine instead. Origination of nearly $320B over the last year feeds management fees, capital solutions fees from over 100 deals a quarter, and Athene reinvestment at 340 basis points over Treasuries. That flywheel supports my 2027 estimates even with a lower alt return.
Adjusted earnings hold up while GAAP swings- Reported ANI per share
- Mine
ANI per share from company earnings releases to Aug 2026; Q3-Q4 2026 mine. As of Oct 8 2026.
Valuation
| 2027 adjusted earnings build | $ billions |
|---|
| Fee related earnings, up 19% | $3.61 |
| Spread related earnings, up 11% | $3.96 |
| Principal investing plus holdco and tax | -$1.42 |
| Adjusted net income, $9.84 a share on 625M shares | $6.15 |
| At 13.5 times, target | $133.00 |
A blended 13.5 times suits a mix of fast growing fees worth a high teen multiple and steadier insurance spread worth a high single digit one. The $2.25 dividend pays about 2.0% while we wait. Upside of 15% with a record pipeline supports a buy.
Where $9.82 of 2027 earnings comes fromMy 2027 estimates from Aug 4 2026 release and Oct 5 8-K alt-income preannouncement. As of Oct 8 2026.
Risks
- Alternative returns stay near 9 to 10% and Athene spread misses its 120 to 125 point goal, which shows up in quarterly spread earnings.
- Wealth redemptions at the ADS private fund widen and $3B quarterly retail inflows stall, which shows up in monthly fund reports.
- The Broadcom $35B draw slips past mid 2027 and capital solutions fees fall under $200M a quarter, which shows up in fee revenue.
What would change my mind
One sentence: sustained weak alt returns with shrinking origination spreads would break the fee plus spread flywheel this call rests on.