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Growth in AUM Likely to Support BlackRock's (BLK) Q4 Earnings
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BlackRock, Inc. (BLK - Free Report) is slated to report fourth-quarter and 2023 results on Jan 12 before the opening bell. While its revenues are expected to have improved in the quarter, earnings are likely to have witnessed a year-over-year decline.
In third-quarter 2023, BLK’s earnings surpassed the Zacks Consensus Estimate. Results benefited from a rise in revenues and higher non-operating income. The assets under management (AUM) balance witnessed improvement. However, higher expenses acted as a headwind.
BlackRock has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering a surprise of 13.3%, on average.
The company’s business activities and prospects in the to-be-reported quarter have not encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s fourth-quarter earnings of $8.71 has been unchanged over the past seven days. The figure indicates a decline of 2.5% from the year-ago quarter’s reported number. Our estimate for fourth-quarter earnings is pinned at $8.50.
The consensus estimate for sales is pegged at $4.57 billion, which suggests a rise of 5.4% from the prior-year quarter’s reported number. Our estimate for sales is pinned at $4.54 billion.
Before we take a look at what our quantitative model predicts for the to-be-reported quarter, let’s discuss the factors that are likely to have impacted the company’s quarterly performance.
Key Factors & Estimates for Q4
BlackRock has been a dominant player in the exchange traded fund (“ETF”) market, given its continued investments in the U.S. iShare core ETFs. As investors have kept increasing allocations toward ETFs instead of alternative investments to reduce management costs, the company’s iShares inflows have been strong over the past several quarters, with the trend expected to have continued in the to-be-reported quarter.
Notably, management expected an acceleration in iShares ETF flows toward the end of 2023.
Thus, driven by expected inflows, BLK’s AUM balance is likely to have increased. The Zacks Consensus Estimate for total AUM is pegged at $9.27 trillion, suggesting a year-over-year rise of 7.8%. Our estimate for total AUM for the fourth quarter is pinned at $9.16 trillion, indicating a rise of 6.6%.
The Zacks Consensus Estimate for investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.61 billion, suggesting a 6.2% year-over-year rise. Our estimate for the same is pinned at $3.67 billion, implying a rise of 7.9%.
The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $194 million, indicating a 14.9% decline from the previous-year quarter’s reported number.
The consensus estimate for distribution fee of $321 million suggests a rise of 2.2% from the previous year. We project the metric to be $329.2 million.
The consensus estimate for technology services revenues is pegged at $387 million, implying a 9.6% year-over-year rise. We project the metric to increase to $401.8 million.
BlackRock’s expenses have been elevated over the past few years. Overall costs are expected to have increased in the fourth quarter, given that the company has been continuing its restructuring initiatives to modify the size and shape of its workforce and improve operating efficiency. Our estimate for total expenses is pinned at $2.99 billion, suggesting a year-over-year rise of 2.9%.
Management expects fourth-quarter 2023 core G&A expenses to reflect seasonal increases in marketing spend and the execution of planned technology investment spend.
The 2023 core G&A expenses are anticipated to increase at the low end of the mid to high-single-digit rate.
Earnings Whispers
According to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate for earnings this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — which is required to be confident of an earnings surprise call.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BlackRock is +1.99%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
A couple of other finance stocks, which you may want to consider, as these, too, have the right combination of elements to post an earnings beat in their upcoming releases, per our model, are Citizens Financial Group, Inc. (CFG - Free Report) and Comerica Incorporated (CMA - Free Report) .
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Growth in AUM Likely to Support BlackRock's (BLK) Q4 Earnings
BlackRock, Inc. (BLK - Free Report) is slated to report fourth-quarter and 2023 results on Jan 12 before the opening bell. While its revenues are expected to have improved in the quarter, earnings are likely to have witnessed a year-over-year decline.
In third-quarter 2023, BLK’s earnings surpassed the Zacks Consensus Estimate. Results benefited from a rise in revenues and higher non-operating income. The assets under management (AUM) balance witnessed improvement. However, higher expenses acted as a headwind.
BlackRock has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering a surprise of 13.3%, on average.
BlackRock, Inc. Price and EPS Surprise
BlackRock, Inc. price-eps-surprise | BlackRock, Inc. Quote
The company’s business activities and prospects in the to-be-reported quarter have not encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s fourth-quarter earnings of $8.71 has been unchanged over the past seven days. The figure indicates a decline of 2.5% from the year-ago quarter’s reported number. Our estimate for fourth-quarter earnings is pinned at $8.50.
The consensus estimate for sales is pegged at $4.57 billion, which suggests a rise of 5.4% from the prior-year quarter’s reported number. Our estimate for sales is pinned at $4.54 billion.
Before we take a look at what our quantitative model predicts for the to-be-reported quarter, let’s discuss the factors that are likely to have impacted the company’s quarterly performance.
Key Factors & Estimates for Q4
BlackRock has been a dominant player in the exchange traded fund (“ETF”) market, given its continued investments in the U.S. iShare core ETFs. As investors have kept increasing allocations toward ETFs instead of alternative investments to reduce management costs, the company’s iShares inflows have been strong over the past several quarters, with the trend expected to have continued in the to-be-reported quarter.
Notably, management expected an acceleration in iShares ETF flows toward the end of 2023.
Thus, driven by expected inflows, BLK’s AUM balance is likely to have increased. The Zacks Consensus Estimate for total AUM is pegged at $9.27 trillion, suggesting a year-over-year rise of 7.8%. Our estimate for total AUM for the fourth quarter is pinned at $9.16 trillion, indicating a rise of 6.6%.
The Zacks Consensus Estimate for investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.61 billion, suggesting a 6.2% year-over-year rise. Our estimate for the same is pinned at $3.67 billion, implying a rise of 7.9%.
The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $194 million, indicating a 14.9% decline from the previous-year quarter’s reported number.
The consensus estimate for distribution fee of $321 million suggests a rise of 2.2% from the previous year. We project the metric to be $329.2 million.
The consensus estimate for technology services revenues is pegged at $387 million, implying a 9.6% year-over-year rise. We project the metric to increase to $401.8 million.
BlackRock’s expenses have been elevated over the past few years. Overall costs are expected to have increased in the fourth quarter, given that the company has been continuing its restructuring initiatives to modify the size and shape of its workforce and improve operating efficiency. Our estimate for total expenses is pinned at $2.99 billion, suggesting a year-over-year rise of 2.9%.
Management expects fourth-quarter 2023 core G&A expenses to reflect seasonal increases in marketing spend and the execution of planned technology investment spend.
The 2023 core G&A expenses are anticipated to increase at the low end of the mid to high-single-digit rate.
Earnings Whispers
According to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate for earnings this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — which is required to be confident of an earnings surprise call.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BlackRock is +1.99%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
A couple of other finance stocks, which you may want to consider, as these, too, have the right combination of elements to post an earnings beat in their upcoming releases, per our model, are Citizens Financial Group, Inc. (CFG - Free Report) and Comerica Incorporated (CMA - Free Report) .
Citizens Financial is scheduled to release quarterly earnings on Jan 17. The company has a Zacks Rank #3 and an Earnings ESP of +0.59% at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for Comerica is +3.28% and it carries a Zacks Rank #3 at present. The company is slated to report quarterly results on Jan 19.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.