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BlackRock (BLK) Down 2.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for BlackRock (BLK - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is BlackRock 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.
BlackRock’s fourth-quarter 2020 adjusted earnings of $10.18 per share surpassed the Zacks Consensus Estimate of $8.84. The figure reflects a rise of 22.1% from the year-ago quarter’s number.
Results for the quarter benefited from an improvement in revenues, partly offset by higher expenses. Further, long-term net inflows resulted in a rise in AUM balance, which was a major positive for the company.
Net income attributable to BlackRock (on a GAAP basis) was $1.55 billion, up 19% from the prior-year quarter.
For 2020, adjusted earnings per share of $33.82 surpassed the Zacks Consensus Estimate of $32.81. Also, the figure was 18.8% higher than the previous year. Net income was $4.93 billion, up 10%.
Revenues Improve & Expenses Rise
Revenues for the reported quarter (on a GAAP basis) were $4.48 billion, increasing 12.6% year over year. The upside stemmed from an increase in almost all components of revenues, except for advisory and other revenues. Moreover, the top line surpassed the Zacks Consensus Estimate of $4.36 billion.
For 2020, GAAP revenues of $16.21 billion surpassed the Zacks Consensus Estimate of $16.09 billion. Also, the figure reflects an increase of 11.5% from 2019.
Quarterly total expenses amounted to $2.63 billion, up 7.8%. The rise was due to an increase in all cost components, except for costs related to the amortization of intangible assets, and general and administration costs.
Non-operating income (on a GAAP basis) was $319 million, up significantly from $96 million recorded in the year-ago quarter.
BlackRock’s adjusted operating income was $1.85 billion, up 20.2% year over year.
Net Inflows Support AUM Growth
As of Dec 31, 2020, AUM totaled $8.68 trillion, reflecting a rise of 16.8% year over year. In the reported quarter, the company witnessed long-term net inflows of $116 billion.
Outlook
The company expects a decline in securities lending revenues and a rise in discretionary money market fee waivers in 2021. This might result in "an additional 0.3 bps negative impact on fee rate" compared with fourth-quarter 2020 annualized base fee rate.
Adjusted operating margin in 2021 is anticipated to be in line with the 2020 figure.
Management plans to repurchase shares worth $1.2 billion in 2021.
Projected tax run rate 2021 is 23%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -5.2% due to these changes.
VGM Scores
Currently, BlackRock has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BlackRock has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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BlackRock (BLK) Down 2.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for BlackRock (BLK - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is BlackRock 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.
BlackRock Q4 Earnings Beat, Revenues & AUM Rise Y/Y
BlackRock’s fourth-quarter 2020 adjusted earnings of $10.18 per share surpassed the Zacks Consensus Estimate of $8.84. The figure reflects a rise of 22.1% from the year-ago quarter’s number.
Results for the quarter benefited from an improvement in revenues, partly offset by higher expenses. Further, long-term net inflows resulted in a rise in AUM balance, which was a major positive for the company.
Net income attributable to BlackRock (on a GAAP basis) was $1.55 billion, up 19% from the prior-year quarter.
For 2020, adjusted earnings per share of $33.82 surpassed the Zacks Consensus Estimate of $32.81. Also, the figure was 18.8% higher than the previous year. Net income was $4.93 billion, up 10%.
Revenues Improve & Expenses Rise
Revenues for the reported quarter (on a GAAP basis) were $4.48 billion, increasing 12.6% year over year. The upside stemmed from an increase in almost all components of revenues, except for advisory and other revenues. Moreover, the top line surpassed the Zacks Consensus Estimate of $4.36 billion.
For 2020, GAAP revenues of $16.21 billion surpassed the Zacks Consensus Estimate of $16.09 billion. Also, the figure reflects an increase of 11.5% from 2019.
Quarterly total expenses amounted to $2.63 billion, up 7.8%. The rise was due to an increase in all cost components, except for costs related to the amortization of intangible assets, and general and administration costs.
Non-operating income (on a GAAP basis) was $319 million, up significantly from $96 million recorded in the year-ago quarter.
BlackRock’s adjusted operating income was $1.85 billion, up 20.2% year over year.
Net Inflows Support AUM Growth
As of Dec 31, 2020, AUM totaled $8.68 trillion, reflecting a rise of 16.8% year over year. In the reported quarter, the company witnessed long-term net inflows of $116 billion.
Outlook
The company expects a decline in securities lending revenues and a rise in discretionary money market fee waivers in 2021. This might result in "an additional 0.3 bps negative impact on fee rate" compared with fourth-quarter 2020 annualized base fee rate.
Adjusted operating margin in 2021 is anticipated to be in line with the 2020 figure.
Management plans to repurchase shares worth $1.2 billion in 2021.
Projected tax run rate 2021 is 23%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -5.2% due to these changes.
VGM Scores
Currently, BlackRock has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BlackRock has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.