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BlackRock's (BLK) Q3 Earnings Beat Estimates as Revenues Rise

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BlackRock’s (BLK - Free Report) third-quarter 2018 adjusted earnings of $7.52 per share outpaced the Zacks Consensus Estimate of $6.93. Further, the bottom line was 27% higher than the year-ago quarter.

Results benefited from an improvement in revenues, rise in assets under management (AUM) and steady long-term inflows. However, increase in operating expenses acted as a headwind.

Net income (on a GAAP basis) was $1.22 billion, up 29% from the prior-year quarter.

Revenue Growth Offsets Rise in Expenses

Revenues (on a GAAP basis) were $3.58 billion, increasing 2% year over year. The rise was driven by an increase in investment advisory, administration fees and securities lending revenues, and technology services revenues. However, the reported figure lagged the Zacks Consensus Estimate of $3.67 billion.

Total expenses amounted to $2.18 billion, up 3% year over year. The increase was due to rise in employee compensation and benefits costs, direct fund expenses, and general and administration costs.

Non-operating income (on a GAAP basis) was $33 million, up from non-operating income of $10 million recorded in the year-ago quarter.

BlackRock’s adjusted operating income was $1.40 billion, up 1% year over year.

Strong AUM & Inflows

As of Sep 30, 2018, AUM totaled $6.44 trillion, reflecting an increase of 8% year over year. Further, during the reported quarter, the company witnessed long-term net inflows of $10.61 billion.

Share Repurchase

During the quarter under review, BlackRock repurchased shares worth $500 million.

Our Viewpoint

BlackRock remains well poised for growth, driven by acquisitions and initiatives to gain market share in the ETF business. However, mounting operating expenses and increased dependence on overseas revenues remain primary near-term concerns.

BlackRock, Inc. Price, Consensus and EPS Surprise
 

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

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

Earnings Release Dates of Other Investment Managers

The Blackstone Group L.P. (BX - Free Report) , Ameriprise Financial, Inc. (AMP - Free Report) and Waddell & Reed Financial, Inc. are scheduled to announce third-quarter 2018 results on Oct 18, Oct 23 and Oct 30, respectively.

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