On Jun 20, 2016, we issued an updated research report on BlackRock Inc. (BLK - Free Report) . While this asset management company enjoys a diversified revenue stream and a strong global presence, soaring expenses amid top line pressure make us apprehensive.
Given the nature of its business, BlackRock depends significantly on Investment advisory, administration and securities lending fees (comprising about 90% of its total revenue as of Mar 31, 2016). These types of revenues are adversely impacted by market fluctuations and foreign exchange translations. Hence, owing to the current weakness and uncertainty in global economy, the company’s top line could be hurt in the near term.
Additionally, BlackRock’s increased dependence on overseas revenues adds to its woes. Though this leads to diversification, the present volatile global scenario is expected to hamper revenue growth to some extent.
Also, continuously rising operating expenses is another major concern for BlackRock. The company witnessed a persistent rise in adjusted operating expenses at a CAGR of 4.2% over the last five years (as of the end of 2015). Increased regulatory compliance costs, G&A expense and higher marketing costs are likely to keep expenses high in the quarters ahead.
Further, BlackRock is a highly leveraged company, with a debt/equity ratio of 1.25 compared with industry average of 0.18. The stock performance is not impressive either, having declined over 3% in the last year.
Notably, driven by these concerns the recent estimate revisions remain unfavorable, indicating analysts’ bearish stance on BlackRock. Over the last 60 days, the stock witnessed three downward estimate revisions (no upward movement) for both 2016 and 2017.
BlackRock, currently, has a Zacks Rank #4 (Sell).
Stocks Worth a Look
Some better-ranked investment managers include Eagle Point Credit Company Inc. (ECC - Free Report) , OM Asset Management plc and Manning & Napier, Inc. , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
On Jun 20, 2016, we issued an updated research report on BlackRock Inc. (BLK - Free Report) . While this asset management company enjoys a diversified revenue stream and a strong global presence, soaring expenses amid top line pressure make us apprehensive.
Given the nature of its business, BlackRock depends significantly on Investment advisory, administration and securities lending fees (comprising about 90% of its total revenue as of Mar 31, 2016). These types of revenues are adversely impacted by market fluctuations and foreign exchange translations. Hence, owing to the current weakness and uncertainty in global economy, the company’s top line could be hurt in the near term.
Additionally, BlackRock’s increased dependence on overseas revenues adds to its woes. Though this leads to diversification, the present volatile global scenario is expected to hamper revenue growth to some extent.
Also, continuously rising operating expenses is another major concern for BlackRock. The company witnessed a persistent rise in adjusted operating expenses at a CAGR of 4.2% over the last five years (as of the end of 2015). Increased regulatory compliance costs, G&A expense and higher marketing costs are likely to keep expenses high in the quarters ahead.
Further, BlackRock is a highly leveraged company, with a debt/equity ratio of 1.25 compared with industry average of 0.18. The stock performance is not impressive either, having declined over 3% in the last year.
Notably, driven by these concerns the recent estimate revisions remain unfavorable, indicating analysts’ bearish stance on BlackRock. Over the last 60 days, the stock witnessed three downward estimate revisions (no upward movement) for both 2016 and 2017.
BlackRock, currently, has a Zacks Rank #4 (Sell).
Stocks Worth a Look
Some better-ranked investment managers include Eagle Point Credit Company Inc. (ECC - Free Report) , OM Asset Management plc and Manning & Napier, Inc. , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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