BlackRock (BLK) Q4 Earnings Miss Estimates on Lower Revenues

BlackRock, Inc. BLK posted fourth-quarter and full-year 2018 results. The company’s fourth-quarter 2018 adjusted earnings of $6.08 per share missed the Zacks Consensus Estimate of $6.39. Further, the figure came in 2% lower than the year-ago tally.

Results were impacted by decline in revenues and assets under management (AUM). Nonetheless, lower operating expenses benefited the company’s performance.

Net income (on a GAAP basis) came in at $927 million, slumping nearly 60% from the prior-year quarter.

Full-year adjusted earnings per share of $26.93 improved 20% year over year. However, the figure missed the Zacks Consensus Estimate of $27.29. GAAP net income for the year was $4.3 billion, down 12% year over year.

Revenues Fall, Expenses Drop

Revenues for the reported quarter (on a GAAP basis) were $3.43 billion, declining 9% year over year. The downside stemmed from decrease in investment advisory, administration fees and securities lending revenue, and investment advisory performance fees. Further, the reported figure marginally missed the Zacks Consensus Estimate of $3.48 billion.

For 2018, GAAP revenues were $14.20 billion, up 4% compared with the prior year. The figure, however, lagged the Zacks Consensus Estimate of $14.28 billion.

Total expenses for fourth-quarter 2018 amounted to $2.18 billion, down nearly 4% year over year. The decline came due to fall in employee compensation and benefit costs, direct fund expenses, and distribution and servicing costs.

Non-operating expense (on a GAAP basis) was $72 million compared with non-operating income of $1 million recorded in the year-ago quarter.

BlackRock’s adjusted operating income was $1.3 billion, down 12% year over year.

Lower AUM & Inflows

As of Dec 31, 2018, AUM totaled nearly $6 trillion, reflecting a decline of 5% year over year. Furthermore, during the reported quarter, the company witnessed long-term net inflows of $43.6 billion.

Our Viewpoint

BlackRock’s acquisitions and expansion efforts have enabled the company to post year-over-year bottom-line growth.

However, dependence on overseas revenues and increase in restructuring charges remain primary near-term concerns.

BlackRock, Inc. Price, Consensus and EPS Surprise

BlackRock, Inc. Price, Consensus and EPS Surprise | BlackRock, Inc. Quote

BlackRock currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Earnings Release Schedule of Other Investment Managers

Ares Capital Corporation ARCC, Federated Investors, Inc. FII and Ameriprise Financial, Inc. AMP are scheduled to announce fourth-quarter 2018 results on Feb 12, Jan 24 and Jan 30, respectively.

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