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Is an Earnings Beat in Store for BlackRock (BLK) in Q4?
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BlackRock, Inc. (BLK - Free Report) is slated to report fourth-quarter and 2021 results on Jan 14, before the opening bell. While its revenues for the quarter are expected to have witnessed year-over-year growth, earnings are likely to have declined.
In third-quarter 2021, BLK’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 8.8%, on average.
The company’s business activities and prospects in the to-be-reported quarter encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s fourth-quarter earnings of $10.15 has been revised marginally upward over the past 30 days. However, the figure indicates a decline of 0.3% from the year-ago quarter’s reported number.
The consensus estimate for fourth-quarter sales is pegged at $5.15 billion, which suggests an increase of 14.9% 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 & Estimates for Q4
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 fourth quarter 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.
The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $425 million, indicating a rise of 23.2% from the previous quarter’s reported number.
Likewise, the consensus estimate for distribution fees of $402 million indicates a marginal rise from the previous quarter’s reported figure.
However, the Zacks Consensus Estimate for total investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.93 billion, suggesting a marginal sequential decline.
BlackRock’s expenses have been elevated over the past few years. Given that 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 fourth quarter as well.
Notably, management projects fourth-quarter 2021 core general and administration expenses to increase sequentially, reflecting seasonal increases in marketing spend, additional costs related to return-to-office planning, and ongoing technology costs associated with cloud migrations.
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 +1.58%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
A few other finance stocks, which 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, are Commerce Bancshares, Inc. (CBSH - Free Report) , BankUnited, Inc. (BKU - Free Report) and Ally Financial Inc. (ALLY - Free Report) .
The Earnings ESP for Commerce Bancshares is +2.11% and it carries a Zacks Rank of 3 at present. The company is scheduled to report quarterly numbers on Jan 19.
Ally Financial is slated to report quarterly earnings on Jan 21. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +4.87%.
Image: Bigstock
Is an Earnings Beat in Store for BlackRock (BLK) in Q4?
BlackRock, Inc. (BLK - Free Report) is slated to report fourth-quarter and 2021 results on Jan 14, before the opening bell. While its revenues for the quarter are expected to have witnessed year-over-year growth, earnings are likely to have declined.
In third-quarter 2021, BLK’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 8.8%, on average.
BlackRock, Inc. Price and EPS Surprise
BlackRock, Inc. price-eps-surprise | BlackRock, Inc. Quote
The company’s business activities and prospects in the to-be-reported quarter encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s fourth-quarter earnings of $10.15 has been revised marginally upward over the past 30 days. However, the figure indicates a decline of 0.3% from the year-ago quarter’s reported number.
The consensus estimate for fourth-quarter sales is pegged at $5.15 billion, which suggests an increase of 14.9% 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 & Estimates for Q4
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 fourth quarter 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.
The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $425 million, indicating a rise of 23.2% from the previous quarter’s reported number.
Likewise, the consensus estimate for distribution fees of $402 million indicates a marginal rise from the previous quarter’s reported figure.
However, the Zacks Consensus Estimate for total investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.93 billion, suggesting a marginal sequential decline.
BlackRock’s expenses have been elevated over the past few years. Given that 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 fourth quarter as well.
Notably, management projects fourth-quarter 2021 core general and administration expenses to increase sequentially, reflecting seasonal increases in marketing spend, additional costs related to return-to-office planning, and ongoing technology costs associated with cloud migrations.
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 +1.58%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
A few other finance stocks, which 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, are Commerce Bancshares, Inc. (CBSH - Free Report) , BankUnited, Inc. (BKU - Free Report) and Ally Financial Inc. (ALLY - Free Report) .
The Earnings ESP for Commerce Bancshares is +2.11% and it carries a Zacks Rank of 3 at present. The company is scheduled to report quarterly numbers on Jan 19.
BankUnited is slated to report quarterly results on Jan 20. The company currently has an Earnings ESP of +42.98% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ally Financial is slated to report quarterly earnings on Jan 21. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +4.87%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.