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BlackRock (BLK) Q3 Earnings Beat Estimates as Revenues Rise

Zacks Equity Research

BlackRock, Inc.’s BLK third-quarter 2019 adjusted earnings of $7.15 per share surpassed the Zacks Consensus Estimate of $6.95. However, the figure was 4.9% lower than the year-ago quarter’s number.

Results benefitted from an improvement in revenues. Moreover, growth in assets under management (AUM), driven by net inflows, was a positive. However, higher expenses hurt results to some extent.

Net income attributable to BlackRock (on a GAAP basis) was $1.12 billion, declining 8% from the prior-year quarter.

Revenues Improve, Expenses Rise

Revenues for the reported quarter (on a GAAP basis) were $3.69 billion, increasing 3.2% year over year. The upside stemmed from an increase in investment advisory, administration fees and securities lending revenues, and technology services revenues. However, the reported figure missed the Zacks Consensus Estimate of $3.73 billion.

Total expenses amounted to $2.19 billion, up marginally year over year. The increase was due to rise in almost all components except for direct fund expenses, and general and administration costs.

Non-operating expenses (on a GAAP basis) were $42 million against non-operating income of $33 million recorded in the year-ago quarter.

BlackRock’s adjusted operating income was $1.50 billion, up 7.3% year over year.

Net Inflows Support AUM Growth

As of Sep 30, 2019, AUM totaled nearly $6.96 trillion, reflecting rise of 8.1% year over year. Furthermore, in the reported quarter, the company witnessed long-term net inflows of $52.26 billion.

Our Viewpoint

BlackRock’s acquisitions and expansion efforts along with initiatives to restructure its actively managed equity business are expected to boost the top line and AUM. Moreover, its capital deployment actions reflect strong balance sheet position. However, a continued increase in operating expenses (as witnessed in the third quarter) and the company's high dependence on overseas revenues remain matters of concern.

BlackRock, Inc. Price, Consensus and EPS Surprise

BlackRock, Inc. Price, Consensus and EPS Surprise

BlackRock, Inc. price-consensus-eps-surprise-chart | BlackRock, Inc. Quote

BlackRock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Schedule of Other Investment Managers

Ameriprise Financial, Inc AMP is scheduled to report results on Oct 23. Federated Investors, Inc FII and Ares Capital Corporation ARCC are scheduled to announce quarterly numbers on Oct 24 and Oct 30, respectively.

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