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BlackRock's (BLK) Improved Revenues Drive Q1 Earnings Beat

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BlackRock, Inc. (BLK - Free Report) 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 (AUM) 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.

Our Viewpoint

BlackRock remains well poised for opportunistic acquisitions, supported by a strong liquidity position. Moreover, its initiatives to gain market share in the ETF business are expected to drive revenue growth in the future. However, increased dependence on overseas revenues and regulatory restrictions remain primary near-term concerns.
 

BlackRock, Inc. Price, Consensus and EPS Surprise
 

BlackRock, Inc. Price, Consensus and EPS Surprise | BlackRock, Inc. Quote

Currently, BlackRock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other investment managers, The Blackstone Group L.P. (BX - Free Report) is expected to announce first-quarter 2017 results on Apr 20, Ameriprise Financial, Inc. (AMP - Free Report) is likely to announce its numbers on Apr 24 and Waddell & Reed Financial, Inc. is expected to announce results on May 2.

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