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What's in the Cards for BlackRock (BLK) in Q3 Earnings?

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BlackRock, Inc. (BLK - Free Report) is slated to report third-quarter 2021 results on Oct 13, 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 second-quarter 2021, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues, partly offset by higher expenses. Long-term net inflows resulted in a rise in assets under management (AUM) balance.

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 9.6%, on average.

However, the company’s business activities and prospects in the third quarter did not encourage analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s third-quarter earnings of $9.63 has been revised 1.8% lower over the past seven days. Nevertheless, the figure indicates a rise of 4.5% from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $5.00 billion, which suggests an increase of 14.5% 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 Q3

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 third quarter has witnessed overall asset inflows, which is expected to have aided BlackRock’s AUM. Thus, driven by an expected increase in AUM, the related fee is expected to have increased in the to-be-reported quarter.

The Zacks Consensus Estimate for total investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.92 billion, suggesting a sequential increase of 4.3%.

However, the consensus estimate for distribution fee of $346 million indicates a fall of 6.2% from the previous quarter’s reported figure. The consensus estimate for investment advisory performance fees of $210 million indicates a decline of 38.2% from the previous quarter’s reported number.

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 third quarter as well.

Earnings Whispers

According to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate this time are low. This is because it does not have 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 -3.76%.

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

Stocks Worth 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.

The Earnings ESP for Bank of America (BAC - Free Report) is +0.30% and it carries a Zacks Rank of 3 at present. The company is scheduled to report quarterly numbers on Oct 14.

BankUnited, Inc. (BKU - Free Report) is slated to report quarterly results on Oct 21. The company currently has an Earnings ESP of +1.90% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ally Financial Inc. (ALLY - Free Report) is slated to report quarterly earnings on Oct 21. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +8.71%.