BlackRock’s ( BLK Quick Quote BLK - Free Report) improving assets under management (AUM) balance is likely to aid its revenues in the days to come. Also, the bank’s inorganic growth efforts are commendable. However, mounting operating expenses and high dependence on overseas revenues are concerns.
BlackRock’s organic growth efforts are impressive. Its net revenues witnessed a compound annual growth rate (CAGR) of 7.3% over the last six years (2015-2020), mainly driven by an improving AUM balance. An increased focus on active equity business, strengthening of iShares and exchange-traded fund operations, along with a solid revenue mix, is likely to keep supporting the company’s revenues in the upcoming quarters.
Acquisitions remain other major contributor to the company’s revenue growth. This February, it acquired investment management services provider, Aperio Group. Over the years, acquisitions have helped BlackRock significantly expand its footprint and market share globally. Besides, the acquisition of Barclays Global Investors in 2009 remains the biggest deal by far. Given the bank’s strong liquidity position, it is anticipated to grow through strategic acquisitions in future.
The company’s capital-deployment initiatives also look encouraging. BlackRock hikes its dividend annually, with the latest hike announced this January. Further, management has plans to buy back shares worth $1.2 billion this year. Given the company’s earnings strength and liquidity positions, its capital-deployment activities seem sustainable.
Also, analysts seem to have an optimistic stance for the stock. The Zacks Consensus Estimate for 2021 earnings has moved marginally upward, over the past 60 days.
Shares of this Zacks Rank #3 (Hold) company have rallied 30.2%, outperforming the
industry’s 27.4% gain over the past six months.
Nevertheless, the company’s mounting expenses on account of investments in restructuring initiatives, along with rise in general and administration costs, might deter bottom-line growth in the near term. Expenses witnessed a CAGR of 9.3% over the six-year period ended 2020. The costs are expected to remain elevated in the quarters ahead.
Apart from these, high dependence on overseas revenues is a major concern for BlackRock. Though one-third of the revenues is generated from overseas markets, a number of risk factors associated with it could impede top-line growth.
Stocks Worth Considering
A few better-ranked stocks from the finance space are mentioned below:
Cowen Group, Inc. ( COWN Quick Quote COWN - Free Report) has recorded an upward earnings estimate revision of 2% for 2021 over the past 30 days. Its shares have surged 94.1% over the past six months. Currently, it sports a Zacks Rank #1 (Strong Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here Citizens Community Bancorp, Inc.’s ( CZWI Quick Quote CZWI - Free Report) ongoing-year earnings estimate has moved 7.6% north over the past 30 days. The company’s shares have appreciated 83.7% in six months’ time. At present, it flaunts a Zacks Rank of 1. Atlas Corp. ( ATCO Quick Quote ATCO - Free Report) has witnessed an upward earnings estimate revision of 11.7% for the current year in the past 30 days. It currently sports a Zacks Rank of 1. The stock has rallied 50.4% over the past six months. Zacks Names “Single Best Pick to Double”
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