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Asset Growth Likely to Aid Blackstone (BX) in Q2 Earnings

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Blackstone (BX - Free Report) is scheduled to report second-quarter 2021 results on Jul 22, before the opening bell. Its revenues and earnings are likely to have increased in the to-be-reported quarter on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results primarily benefited from an improvement in revenues. A rise in assets under management (AUM) balance, mainly driven by inflows, was a positive.

Blackstone has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three and met in one of the trailing four quarters, the average surprise being 16.3%.

Blackstone Group IncThe Price and EPS Surprise

 

Blackstone Group IncThe Price and EPS Surprise

Blackstone Group IncThe price-eps-surprise | Blackstone Group IncThe Quote

Business prospects and activities of the company in the second quarter won analysts’ confidence. As a result, the Zacks Consensus Estimate for its earnings of 79 cents for the to-be-reported quarter has been revised 5.3% upward over the past seven days. The figure indicates a rise of 83.7% from the prior-year quarter’s reported number.

The consensus estimate for sales is pegged at $1.93 billion, which suggests an increase of 73.7% from the year-ago quarter’s reported figure.

Now, let’s check the factors that are expected to have influenced the company’s second-quarter performance.

Key Factors to Note

Blackstone has been witnessing a rise in fee-earning AUM and total AUM for the past few years on the back of its diversified product and revenue mix, a superior position in the alternative investments space, and net inflows. Despite an overall challenging operating backdrop amid the coronavirus pandemic, the trend is likely to have continued in the to-be-reported quarter.

Unlike the prior few quarters, the second quarter of 2021 did not record a significant rise in market volatility. However, despite relatively low volatility and market normalization, client activity was decent in the quarter. Also, the quarter witnessed overall asset inflows, which along with decent client activity is expected to have aided AUM growth.

The Zacks Consensus Estimate for Blackstone’s second-quarter AUM is pegged at $663 billion, which indicates a rise of 2.2% from the previous quarter’s reported figure. Also, the consensus estimate for total fee-earning AUM of $497 billion suggests a sequential rise of 3.3%.

The Zacks Consensus Estimate for net management and advisory fees (segment revenues) for the to-be-reported quarter is pegged at $1.21 billion, which indicates growth of 2% from the prior quarter.

However, the consensus estimate for fee-related performance revenues (segment revenues) of $49.17 million suggests a decline of 70.9% sequentially.

Blackstone’s expenses have been elevated over the past few years mainly because of higher general, administrative and other expenses. As the company continues to make investments in franchise, expenses are expected to have risen to some extent in the second quarter as well.

Here is what our quantitative model predicts:

According to our quantitative model, the chances of Blackstone beating the Zacks Consensus Estimate this time are low. That is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better.

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 Blackstone is -1.58%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy). While this increases the predictive power of ESP, we also need a positive ESP to be confident of an earnings beat.

Stocks That Warrant a Look

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

BankUnited (BKU - Free Report) is scheduled to release earnings on Jul 22. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +3.07%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank OZK (OZK - Free Report) is slated to report quarterly results on Jul 22. The company currently has an Earnings ESP of +7.68% and a Zacks Rank of 2.

Huntington Bancshares (HBAN - Free Report) is slated to report quarterly results on Jul 29. The company currently has an Earnings ESP of +1.42% and a Zacks Rank of 3.


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Bank OZK (OZK) - free report >>