BlackRock, Inc. BLK prepares to unveil its first-quarter 2024 results on Apr 12, setting an optimistic tone for investors. An anticipation swirls around improved revenues and earnings compared to the previous year.
Reflecting on the fourth quarter of 2023, BLK’s earnings outshone the Zacks Consensus Estimate, buoyed by increased revenues and higher non-operating income. Furthermore, a growth spurt in the assets under management (AUM) painted a favorable picture due to net inflows.
In BlackRock’s financial history, a positive trend shines through. Earnings have consistently outperformed the Zacks Consensus Estimate in the past four quarters, showcasing an average surprise of 12.6%.
BlackRock, Inc. Price and EPS Surprise
BlackRock, Inc. price-eps-surprise | BlackRock, Inc. Quote
Market pundits have showered BlackRock with favorable projections for the upcoming quarter. Analysts have breathed new life into earnings estimates, with the Zacks Consensus Estimate for BlackRock’s first-quarter earnings climbing 1.3% in the past seven days to $9.36. This forecast hints at an 18% increase from the reported figure in the same quarter last year. Our internal projection aligns closely at $9.
The sales estimate rests at $4.67 billion, showcasing a 10.2% leap from the previous year. Internally, we peg the sales number at $4.60 billion.
Before diving into our quantitative predictions for the upcoming quarter, let’s delve into the key factors likely to sculpt the company’s performance.
Factors Driving Q1 Performance
BlackRock stands tall as a stalwart in the exchange-traded fund (“ETF”) domain. The U.S. iShare core ETFs have been a cornerstone of the company’s success, drawing investors with their promise of reduced management costs. Flowing with this current, iShares have witnessed robust inflows over multiple quarters, a trajectory forecasted to continue in the imminent period.
Propelled by anticipated inflows, BLK’s AUM is poised for a surge. Projections place total AUM at $10.2 trillion, signifying an 11.6% rise year-over-year.
The estimate for investment advisory, administration fees, and securities-lending revenues for the upcoming quarter stands at $3.82 billion, pointing to an 8.9% annual increment. Our in-house estimate hovers at $3.69 billion, predicting a 5.3% uptick.
Anticipations also lean towards investment advisory performance fees stepping up to $120 million, marking a substantial ascent from the previous year. Our forecast sets this figure at $163.3 million.
Expectations for distribution fees sit at $330 million, indicating a 3.4% rise from the prior year. Our outlook sets this metric at $314 million.
Meanwhile, technology services revenues are projected to reach $386 million, signaling a 13.5% annual growth. Our projection pushes this figure to $405.2 million.
Not all is smooth sailing for BlackRock as expenses have been on an uptrend in recent years. Q1 is projected to witness escalated costs given the company’s commitment to restructuring initiatives aimed at bolstering operational efficiency. Our forecast for total expenses forecasts a 6.9% year-over-year rise to $3 billion.
Pivotal Developments in the Quarter
A significant move took place in January when BlackRock announced a $3 billion acquisition of GIP, bolstered by approximately 12 million shares of BlackRock’s common stock. GIP, a renowned independent infrastructure manager, joins hands with BlackRock to amass over $150 billion in infrastructure client AUM covering equity, debt, and solutions. The collaboration aimed at delivering market-leading expertise across infrastructure sectors at a substantial scale is set to consummate in the third quarter of 2024.
Further, in March, BlackRock disclosed its intention to secure the remaining 75% equity stake in SpiderRock Advisors, renowned for tailored option overlay strategies in the U.S. wealth market. This endeavor, building on BlackRock’s earlier minority investment in the firm, underscores the company’s commitment to personalized separately managed accounts. This transaction is expected to wrap up in the second quarter of 2024, contingent upon customary approvals.
Earnings Projection
Analyzing through our quantitative lens, the outlook for BlackRock surpassing the Zacks Consensus Estimate for earnings this time appears dim. The lack of the necessary combo — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — casts a shadow on predicting an earnings surprise.
Unlock investment insights by discovering promising stocks ahead of their reporting date with our Earnings ESP Filter.
Earnings ESP: BlackRock’s Earnings ESP stands at -0.22%.
Zacks Rank: The company presently holds a Zacks Rank of #3.
Other Stocks to Watch
Delving into the finance sector, two stocks catching the eye are The Charles Schwab Corporation SCHW and Zions Bancorporation, National Association ZION. Both exhibit promising combinations that hint at a potential earnings beat in their upcoming releases, as per our analysis.
SCHW is slated to announce its earnings on Apr 15, backed by a Zacks Rank of #3 and an Earnings ESP of +0.30%. The spotlight shifts to ZION, with an Earnings ESP of +1.86% and a Zacks Rank of #3, unveiling its quarterly results on Apr 22.
Dive deep into upcoming earnings revelations with the Zacks Earnings Calendar.
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The perspective conveyed here represents the personal views of the author and not necessarily those of Nasdaq, Inc.
