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Is a Beat in the Offing for BlackRock (BLK) in Q2 Earnings?

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BlackRock, Inc. (BLK - Free Report) is slated to report second-quarter 2021 results on Jul 14, before the opening bell. Its revenues and earnings in the to-be-reported quarter are expected to have improved on a year-over-year basis.

In first-quarter 2021, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues and lower expenses. Further, long-term net inflows resulted in a rise in assets under management (AUM) balance, which was a major positive for the company.

BlackRock has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a surprise of 11.1%, on average.

The company’s business activities and prospects in the second quarter encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s second-quarter earnings of $9.18 has been revised 1% higher over the past seven days. The figure indicates a rise of 16.9% from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $4.68 billion, which suggests an increase of 28.3% from the prior-year quarter’s reported number.

Now, before we take a look at what our quantitative model predicts for the to-be-reported quarter, let’s discuss the factors that are likely to have impacted the company’s quarterly performance.

Key Factors for Q2

BlackRock has been a dominant player in the exchange traded fund (ETF) market, given its continued investments in the U.S. iShare core ETFs. With investors increasing allocations toward ETFs instead of alternative investments to reduce management costs, the company’s iShares inflows have been strong over the past several quarters.

Moreover, the second quarter has witnessed decent asset inflows, which is expected to have positively impacted BlackRock’s AUM. Thus, driven by an expected increase in AUM, the related fee is also expected to have increased in the to-be-reported quarter.

However, BlackRock’s expenses have been elevated over the past few years. As the company continues with its restructuring initiatives to modify the size and shape of its workforce, and improve operating efficiency, overall costs are expected to have increased in the second quarter as well.

Earnings Whispers

According to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate this time are high. This is because it has 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 +1.42%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are some other finance stocks that you may want to consider as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model.

The Earnings ESP for First Republic Bank (FRC - Free Report) is +1.47% and it carries a Zacks Rank of 3 at present. The company is scheduled to report quarterly numbers on Jul 13.

PNC Financial (PNC - Free Report) is slated to report quarterly results on Jul 14. The company currently has an Earnings ESP of +6.14% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank of America (BAC - Free Report) is slated to report quarterly earnings on Jul 14. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.55%.