The Blackstone Group L.P. (BX Quick QuoteBX - Free Report) is scheduled to report its second-quarter 2016 results before the opening bell on Thursday, Jul 21.

Last quarter, the company reported a negative earnings surprise of 29.5%. Revenues plunged as volatile markets led to lower performance fees and total investment loss. This was, however, partially allayed by a fall in expenses.

The company has a disappointing earnings surprise history as depicted in the chart below:

BLACKSTONE GRP Price and EPS Surprise

BLACKSTONE GRP Price and EPS Surprise | BLACKSTONE GRP Quote

What to Expect in Q2?

On the expense side, the overall uptrend in costs is anticipated to continue in the second quarter, owing to higher compensation and benefit costs as the company’s well-performing funds require more headcount.

Despite high market volatility, Blackstone’s publicly traded private equity and real estate investments are expected to display improved performance in the quarter. As a result, the company might report boosted performance fees in the upcoming release.

Moreover, Blackstone continues to expand its investment activity to capitalize on public market dislocation and is anticipated to report higher deployment of capital during the second quarter. Also, the company’s strategies are projected to generate solid inflows going forward.

Uptrend in Blackstone’s fee-earning AUM and total AUM are expected to have continued into the second quarter as well, driven primarily by the company’s extensive fund-raising activity. This indicates stable or improving fee income for the company.

Blackstone remains comparatively immune to the prevalent low interest rate environment as it chiefly deals in asset management and private equity businesses. Furthermore, with improvement in the overall economic scenario, the company’s fund-raising ability should aid performance fee growth, backed by the increasing risk appetite of investors.

Blackstone’s activities failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate declined 18.4% to 40 cents per share over the past 7 days.

Earnings Whispers

Our proven model does not conclusively show that Blackstone is likely to beat earnings in the second quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for Blackstone is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 40 cents.
 
Zacks Rank: Blackstone’s Zacks Rank #4 (Sell) decreases the chance of an earnings surprise. Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some stocks you may want to consider as our proven model shows they have the necessary combination of the elements to beat earnings this season.

Hancock Holding Company has an earnings ESP of +4.55% and carries a Zacks Rank #3. It is scheduled to report its second-quarter results on Jul 20.

The earnings ESP for Cullen/Frost Bankers, Inc. (CFR Quick QuoteCFR - Free Report) is +0.96% and it carries a Zacks Rank #3. The company is expected to release its second-quarter results on Aug 3.

Federated Investors, Inc. has an earnings ESP of +2.13% and carries a Zacks Rank #3. It is slated to report its second-quarter results on Jul 28.

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