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Active Equity Focus, Robust AUM Aid BlackRock (BLK), Costs Ail
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BlackRock’s (BLK - Free Report) robust assets under management (AUM) balance, its efforts to restructure the equity business, along with strategic acquisitions, will support its top line. Given its earnings strength and solid liquidity position, the company is expected to sustain efficient capital deployments in the future and, hence, keep enhancing shareholder value.
The Zacks Consensus Estimate for BLK’s current-year earnings has been revised 1% upward over the past 30 days. This reflects that analysts are optimistic regarding its earnings growth potential.
However, persistently rising expenses (mainly due to higher administration costs) are expected to hurt the company’s bottom line. BlackRock’s high dependence on overseas revenues is worrisome. Thus, BLK currently carries a Zacks Rank #3 (Hold).
Over the past six months, shares of the company have gained 4.3% compared with the industry’s growth of 2.2%.
Image Source: Zacks Investment Research
Looking at its fundamentals, BlackRock’s AUM witnessed a seven-year (2015-2021) compound annual growth rate (CAGR) of 13.6%. Over the same period, the company’s revenues (on a GAAP basis) witnessed a CAGR of 9.2%. While AUM and revenues witnessed a decline in the first nine months of 2022 due to the tough operating backdrop amid the macroeconomic concerns, the trend will likely reverse in the future.
Given the company’s efforts to strengthen the iShares and ETF operations, and increased focus on the active equity business, BLK's top line is expected to be positively impacted in the quarters ahead.
BlackRock has expanded largely via acquisitions. In June 2021, it acquired the Climate Change Scenario Model of Baringa Partners. In February, it completed the acquisition of investment management services provider, Aperio Group.
Apart from these, over the years, the company has acquired several firms across the globe, expanding its footprint and market share. Nonetheless, the acquisition of Barclays Global Investors in 2009 remains the biggest deal by far. With a strong liquidity position, the company remains well-positioned to grow through buyouts.
However, the company’s total expenses increased, seeing a CAGR of 9.2%, over the last six years (ended 2021) mainly due to a rise in general and administration costs. While expenses declined in the first nine months of 2022, the same is expected to remain elevated in the near term, given the company’s restructuring initiatives to improve operating efficiency.
BlackRock is a geographically diversified company with a presence in almost all the major markets of the world. Its dependence on overseas revenues has been gradually increasing over the last few years. Despite generating just about one-third of revenues from overseas markets, a number of risks stemming from regulatory and political environments, foreign exchange fluctuations and the performance of the regional economy could negatively affect its top-line growth.
The Zacks Consensus Estimate for Hancock Whitney’s 2022 earnings has moved marginally upward over the past 30 days. So far this year, HWC’s shares have gained 9.6%.
The Zacks Consensus Estimate for F.N.B. Corp’s 2022 has been unchanged over the past 30 days. FNB’s shares have rallied 16.2% in the year-to-date period.
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Active Equity Focus, Robust AUM Aid BlackRock (BLK), Costs Ail
BlackRock’s (BLK - Free Report) robust assets under management (AUM) balance, its efforts to restructure the equity business, along with strategic acquisitions, will support its top line. Given its earnings strength and solid liquidity position, the company is expected to sustain efficient capital deployments in the future and, hence, keep enhancing shareholder value.
The Zacks Consensus Estimate for BLK’s current-year earnings has been revised 1% upward over the past 30 days. This reflects that analysts are optimistic regarding its earnings growth potential.
However, persistently rising expenses (mainly due to higher administration costs) are expected to hurt the company’s bottom line. BlackRock’s high dependence on overseas revenues is worrisome. Thus, BLK currently carries a Zacks Rank #3 (Hold).
Over the past six months, shares of the company have gained 4.3% compared with the industry’s growth of 2.2%.
Image Source: Zacks Investment Research
Looking at its fundamentals, BlackRock’s AUM witnessed a seven-year (2015-2021) compound annual growth rate (CAGR) of 13.6%. Over the same period, the company’s revenues (on a GAAP basis) witnessed a CAGR of 9.2%. While AUM and revenues witnessed a decline in the first nine months of 2022 due to the tough operating backdrop amid the macroeconomic concerns, the trend will likely reverse in the future.
Given the company’s efforts to strengthen the iShares and ETF operations, and increased focus on the active equity business, BLK's top line is expected to be positively impacted in the quarters ahead.
BlackRock has expanded largely via acquisitions. In June 2021, it acquired the Climate Change Scenario Model of Baringa Partners. In February, it completed the acquisition of investment management services provider, Aperio Group.
Apart from these, over the years, the company has acquired several firms across the globe, expanding its footprint and market share. Nonetheless, the acquisition of Barclays Global Investors in 2009 remains the biggest deal by far. With a strong liquidity position, the company remains well-positioned to grow through buyouts.
However, the company’s total expenses increased, seeing a CAGR of 9.2%, over the last six years (ended 2021) mainly due to a rise in general and administration costs. While expenses declined in the first nine months of 2022, the same is expected to remain elevated in the near term, given the company’s restructuring initiatives to improve operating efficiency.
BlackRock is a geographically diversified company with a presence in almost all the major markets of the world. Its dependence on overseas revenues has been gradually increasing over the last few years. Despite generating just about one-third of revenues from overseas markets, a number of risks stemming from regulatory and political environments, foreign exchange fluctuations and the performance of the regional economy could negatively affect its top-line growth.
Stocks to Consider
A couple of better-ranked stocks from the finance space are Hancock Whitney Corporation (HWC - Free Report) and F.N.B. Corporation (FNB - Free Report) . At present, both HWC and FNB carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Hancock Whitney’s 2022 earnings has moved marginally upward over the past 30 days. So far this year, HWC’s shares have gained 9.6%.
The Zacks Consensus Estimate for F.N.B. Corp’s 2022 has been unchanged over the past 30 days. FNB’s shares have rallied 16.2% in the year-to-date period.