It has been about a month since the last earnings report for The Blackstone Group L.P. (NYSE:BX) . Shares have lost about 5.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Blackstone Beats on Q4 Earnings as Revenues Improve
Blackstone reported fourth-quarter 2016 economic net income (ENI (MI:ENI)) of $0.68 per share, which surpassed the Zacks Consensus Estimate of $0.63. Moreover, the figure compared favorably with $0.37 recorded in the prior-year quarter.
Better-than-expected quarterly results were attributable to a significant increase in revenues. Also, growth in assets under management (AUM) continued to be impressive. However, escalated expenses acted as a major headwind.
For the quarter, Blackstone reported ENI of $811.6 million, up 86% year over year.
For 2016, the company’s ENI of $2.00 per share was above the Zacks Consensus Estimate of $1.95. Also, the figure grew 10% year over year. ENI of $2.39 billion increased 11% from the 2015 level.
Revenues Rise, Costs Jump
Total revenue (GAAP basis) increased 75% year over year to $1.57 billion. The rise was mainly due to significant rise in performance fees as well as higher fee, and interest and dividend revenues, partially offset by investment loss. Further, it handily surpassed the Zacks Consensus Estimate of $1.43 billion.
For 2016, total revenue (GAAP basis) was $5.13 billion, which outpaced the Zacks Consensus Estimate of $4.91 billion. Also, the figure was 10% above the year-ago level.
Total expenses (GAAP basis) jumped 48% year over year to $824.5 million. The hike was primarily due to a rise in total compensation and benefits, and drastic increase in fund expenses.
Fee-earning AUM grew 13% year over year to $277.1 billion. Total AUM amounted to $366.6 billion as of Dec 31, 2016, up 9% year over year. The rise in total AUM was largely driven by $69.7 billion of gross inflows.
As of Dec 31, 2016, Blackstone had $4.6 billion in total cash, cash equivalents and corporate treasury investments.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past two months. There has been one revision lower.
VGM Scores
At this time, Blackstone's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with an 'A'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall,the stock has an aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of this revision looks promising. Notably the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
The Blackstone Group L.P. (BX): Free Stock Analysis Report
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