Why Earnings Beat Is Less Likely For Blackstone (BX) In Q3?

The Blackstone Group L.P. (NYSE:BX) is scheduled to report third-quarter 2017 results before the opening bell on Oct 19. Its revenues and earnings are expected to grow year over year.

Last quarter, the company’s economic net income lagged the Zacks Consensus Estimate. Higher expenses were partially offset by a rise in revenues.

Blackstone boasts an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 8.4%.

However, activities of the company in the third quarter failed to win analysts’ confidence. As a result, its Zacks Consensus Estimate for earnings of 59 cents has decreased 9.2% over the last 30 days. Nevertheless, the figure reflects a year-over-year improvement of 2.8%.

Also, the company’s Zacks Consensus Estimate for sales of $1.49 billion reflects an improvement of 4.2% from the year-ago quarter.

The company’s price performance does not seem very impressive either. Its shares have gained 23% year to date, underperforming the 25.6% rally of the industry it belongs to.

Will the price performance improve post Q3 earnings release? Let’s see how things have shaped up for this announcement.

Earnings Whispers

According to our quantitative model, chances of Blackstone beating the Zacks Consensus Estimate in the third quarter are low. This is because it does not have the right combination of the two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP for Blackstone is -7.38%.

Zacks Rank: Blackstone has a Zacks Rank of 3, which increases the predictive power of ESP. But we also need a positive ESP to be confident of an earnings beat.

Factors to Influence Q3 Results

With improvement in the overall economic scenario, the company’s fund-raising ability should aid the uptrend in its fee-earning AUM and total AUM. This is likely to lead to stable or improving fee income for the company.

Moreover, the Zacks Consensus Estimate for AUM of $378 billion for the quarter reflects a 1.95 improvement sequentially.

Also, Blackstone continues to expand its investment activity to capitalize on public market dislocation and should report higher deployment of capital during the quarter.

On the expense side, as the company’s well-performing funds require more headcount, costs are likely to increase.

Stocks That Warrant a Look

Here are some stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

SLM Corporation (NASDAQ:SLM) has an Earnings ESP of +1.01% and carries a Zacks Rank of 3. It is scheduled to report results on Oct 18.

Associated Banc-Corp (NYSE:ASB) is slated to report results on Oct 19. It has an earnings ESP of +1.92% and a Zacks Rank of 3.

Invesco Ltd. (NYSE:IVZ) is slated to report results on Oct 26. It has an earnings ESP of +0.65% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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