Back to top

Image: Bigstock

BlackRock (BLK) Down 12.8% Since Last Earnings Report: Can It Rebound?

Read MoreHide Full Article

It has been about a month since the last earnings report for BlackRock (BLK - Free Report) . Shares have lost about 12.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is BlackRock due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

BlackRock Q1 Earnings Beat, Revenues & AUM Rise Y/Y

BlackRock’s first-quarter 2022 adjusted earnings of $9.52 per share outpaced the Zacks Consensus Estimate of $8.92. The figure reflects a rise of 18.4% from the year-ago quarter.

Results benefited from an improvement in revenues, partly offset by higher expenses. Moreover, long-term net inflows supported growth in AUM balance, which was a major positive.

Net income attributable to BlackRock (on a GAAP basis) was $1.44 billion, up 19.8% from the prior-year quarter.

Revenues Improve, Expenses Rise

Revenues (on a GAAP basis) were $4.70 billion, increasing 6.8% year over year. The upside stemmed from an increase in almost all components of revenues, except for investment advisory performance fees. The figure lagged the Zacks Consensus Estimate of $4.90 billion.

Total expenses amounted to $2.94 billion, up 2.9% from the year-ago period. The rise was due to an increase in almost all cost components, except for general and administration expenses.

Non-operating expenses (on a GAAP basis) were $138 million against non-operating income of $46 million in the year-ago quarter.

BlackRock’s adjusted operating income was $1.82 billion, up 13.9% from the prior-year period.

Net Inflows Support AUM Growth

As of Mar 31, 2022, AUM totaled $9.57 trillion, reflecting a year-over-year jump of 6.2%. In the reported quarter, the company witnessed long-term net inflows of $114 billion.

Share Repurchase Update

BlackRock repurchased shares worth $500 million in the reported quarter.

Outlook

The company expects headcount to increase 10%, with a continued focus on optimizing its talent pyramid for more junior roles, and growing its footprint and iHub innovation centers.

Core G&A expenses in 2022 are anticipated to increase 15-20% as the company continues to invest in technology to scale operations and support growth (including completing Aladdin’s cloud migration, delivering new Aladdin capabilities and continuing to open the platform to promote client innovation).

Over the long term, the company expects low to mid-teens growth in annual contract value (ACV).

The projected tax run rate for 2022 is 24%.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -5.11% due to these changes.

VGM Scores

At this time, BlackRock has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BlackRock has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


BlackRock, Inc. (BLK) - free report >>

Published in