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What's in the Offing for BlackRock (BLK) in Q3 Earnings?
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BlackRock, Inc. (BLK - Free Report) is slated to report third-quarter 2018 results on Oct 16, before the opening bell. Its revenues and earnings are projected to grow year over year.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues, rise in assets under management (AUM) and long-term inflows.
Moreover, the company boasts an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 3.5%.
However, BlackRock’s business activities and prospects in the to-be-reported quarter did not encourage analysts to revise earnings estimates upward. The Zacks Consensus Estimate for earnings of $6.93 edged down nearly 1% over the past 30 days. Nonetheless, the figure reflects a year-over-year improvement of 17.1%.
Despite robust fundamentals, the company’s price performance does not seem impressive. In the past year, its shares have lost 10.5% compared with 14.7% decline recorded by the industry.
Will this price performance improve post Q3 earnings? To a great extent, it depends on whether or not the company is able to beat earnings estimates this time around.
Before we take a look at what our quantitative model predicts, let’s discuss the factors that are likely to impact Q3 results.
Factors to Influence Q3 Results
BlackRock remains a dominant player in the ETF market, given its continued investments in U.S. iShare core ETFs. Moreover, as investors are increasing their allocations toward ETFs instead of alternative investments, in order to reduce management costs, the company’s iShares inflows are expected to have remained strong in the Sep-end quarter.
Thus, while negative foreign currency adjustments during the quarter might have had an unfavorable impact on AUM, total AUM is likely to improve, driven by steady inflows. The Zacks Consensus Estimate for total AUM for the third quarter is $6.48 trillion, reflecting growth of 8.4% year over year.
Supported by the increase in assets during the quarter to be reported, investment advisory, administration fees and securities lending revenues, which constitute more than 80% of the company’s total revenues, is also expected to witness improvement. The Zacks Consensus Estimate for the same is $3.07 billion, reflecting 10% year-over-year increase.
Moreover, the Zacks Consensus Estimate for distribution fees is $309 million, reflecting significant improvement from the prior-year quarter figure of $5 million.
Further, consensus estimates for advisory and other revenues show that this component is also likely to witness a rise. The Zacks Consensus Estimate for the same is $80 million, which reflects improvement of 14.3% year over year.
Nonetheless, performance fee, which is also a major revenue component, will likely decline during the quarter to be reported. The Zacks Consensus Estimate for performance fees for the third quarter is $111 million, which represents decline of 41.9% from the prior-year quarter.
Thus, while performance fee is projected to decline, an improvement in the other components of revenues is likely to boost the company’s total revenues. The Zacks Consensus Estimate for sales for the third quarter is $3.67 billion, which reflects growth of 13.5% year over year.
Notably, BlackRock might witness an increase in costs in the Jul-Sep quarter. The company’s expenses have remained elevated over the last few years. Furthermore, the restructuring of the traditional actively managed equities business, along with its plans for improving product offerings, make result in flaring up expenses.
Earnings Whispers
According to our quantitative model, chances of BlackRock beating the Zacks Consensus Estimate in the third quarter are low. This is because it does not have 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 -0.31%.
Zacks Rank: BlackRock currently carries a Zacks Rank #3. While this increases the predictive power of ESP, we also need a positive ESP to be confident of an earnings beat.
Stocks Worth a Look
Here are a few finance stocks that you may want to consider, as these have the right combination of elements to post an earnings beat this quarter, according to our model.
T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to release results on Oct 25. It has an Earnings ESP of +0.78% and a Zacks Rank #2.
Ally Financial Inc. (ALLY - Free Report) has an Earnings ESP of +0.50% and carries a Zacks Rank of 3. The company is also slated to release results on Oct 25.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
What's in the Offing for BlackRock (BLK) in Q3 Earnings?
BlackRock, Inc. (BLK - Free Report) is slated to report third-quarter 2018 results on Oct 16, before the opening bell. Its revenues and earnings are projected to grow year over year.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues, rise in assets under management (AUM) and long-term inflows.
Moreover, the company boasts an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 3.5%.
BlackRock, Inc. Price and EPS Surprise
BlackRock, Inc. Price and EPS Surprise | BlackRock, Inc. Quote
However, BlackRock’s business activities and prospects in the to-be-reported quarter did not encourage analysts to revise earnings estimates upward. The Zacks Consensus Estimate for earnings of $6.93 edged down nearly 1% over the past 30 days. Nonetheless, the figure reflects a year-over-year improvement of 17.1%.
Despite robust fundamentals, the company’s price performance does not seem impressive. In the past year, its shares have lost 10.5% compared with 14.7% decline recorded by the industry.
Will this price performance improve post Q3 earnings? To a great extent, it depends on whether or not the company is able to beat earnings estimates this time around.
Before we take a look at what our quantitative model predicts, let’s discuss the factors that are likely to impact Q3 results.
Factors to Influence Q3 Results
BlackRock remains a dominant player in the ETF market, given its continued investments in U.S. iShare core ETFs. Moreover, as investors are increasing their allocations toward ETFs instead of alternative investments, in order to reduce management costs, the company’s iShares inflows are expected to have remained strong in the Sep-end quarter.
Thus, while negative foreign currency adjustments during the quarter might have had an unfavorable impact on AUM, total AUM is likely to improve, driven by steady inflows. The Zacks Consensus Estimate for total AUM for the third quarter is $6.48 trillion, reflecting growth of 8.4% year over year.
Supported by the increase in assets during the quarter to be reported, investment advisory, administration fees and securities lending revenues, which constitute more than 80% of the company’s total revenues, is also expected to witness improvement. The Zacks Consensus Estimate for the same is $3.07 billion, reflecting 10% year-over-year increase.
Moreover, the Zacks Consensus Estimate for distribution fees is $309 million, reflecting significant improvement from the prior-year quarter figure of $5 million.
Further, consensus estimates for advisory and other revenues show that this component is also likely to witness a rise. The Zacks Consensus Estimate for the same is $80 million, which reflects improvement of 14.3% year over year.
Nonetheless, performance fee, which is also a major revenue component, will likely decline during the quarter to be reported. The Zacks Consensus Estimate for performance fees for the third quarter is $111 million, which represents decline of 41.9% from the prior-year quarter.
Thus, while performance fee is projected to decline, an improvement in the other components of revenues is likely to boost the company’s total revenues. The Zacks Consensus Estimate for sales for the third quarter is $3.67 billion, which reflects growth of 13.5% year over year.
Notably, BlackRock might witness an increase in costs in the Jul-Sep quarter. The company’s expenses have remained elevated over the last few years. Furthermore, the restructuring of the traditional actively managed equities business, along with its plans for improving product offerings, make result in flaring up expenses.
Earnings Whispers
According to our quantitative model, chances of BlackRock beating the Zacks Consensus Estimate in the third quarter are low. This is because it does not have 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 -0.31%.
Zacks Rank: BlackRock currently carries a Zacks Rank #3. While this increases the predictive power of ESP, we also need a positive ESP to be confident of an earnings beat.
Stocks Worth a Look
Here are a few finance stocks that you may want to consider, as these have the right combination of elements to post an earnings beat this quarter, according to our model.
Ameriprise Financial, Inc. (AMP - Free Report) is slated to release results on Oct 23. It has an Earnings ESP of +4.30% and currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to release results on Oct 25. It has an Earnings ESP of +0.78% and a Zacks Rank #2.
Ally Financial Inc. (ALLY - Free Report) has an Earnings ESP of +0.50% and carries a Zacks Rank of 3. The company is also slated to release results on Oct 25.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>