A month has gone by since the last earnings report for BlackRock, Inc. (NYSE:BLK) . Shares have added about 1.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
BlackRock’s Improved Revenues Drive Q1 Earnings Beat
BlackRock reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. Moreover, the bottom line came in 24% higher than the year-ago quarter.
Better-than-expected results were primarily driven by an improvement in revenues, partially offset by an increase in expenses. Further, assets under management experienced a year-over-year rise and the company witnessed strong inflows during the quarter.
Net income (on a GAAP basis) came in at $862 million, up 31% from the prior-year quarter.
Revenue Growth Offsets Higher Expenses
Revenues increased 8% year over year to $2.82 billion. The rise was due to an increase in all the components except distribution fees, and advisory and other revenue. However, the reported figure marginally lagged the Zacks Consensus Estimate of $2.88 billion.
Total expenses amounted to $1.68 billion, up nearly 1% year over year. This was due to a rise in employee compensation and benefits expense, distribution and servicing costs, and direct fund expense.
Non-operating expense (on a GAAP basis) came in at $7 million compared with $48 million in the year-ago quarter. BlackRock’s adjusted operating income came in at $1.15 billion, up 10% year over year.
Strong AUM & Inflows
As of Mar 31, 2017, AUM totaled $5.4 trillion, up 14% year over year. Further, during the reported quarter, the company witnessed long-term net inflows of $80.34 billion.
Capital Deployment
During the quarter, BlackRock repurchased shares worth $275 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower.
BlackRock, Inc. Price and Consensus
VGM Scores
At this time, BlackRock's stock has a poor Growth Score of 'F'. However, its Momentum is doing a bit better with a 'C'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. The stock has a Zacks Rank #3 (Hold). We expect in-line return from the stock in the next few months.
BlackRock, Inc. (BLK): Free Stock Analysis Report
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