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BlackRock (BLK) Tops Q4 Earnings Estimates, to Acquire GIP
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BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2023 adjusted earnings of $9.66 per share handily surpassed the Zacks Consensus Estimate of $8.84. The figure reflects an increase of 8.2% from the year-ago quarter.
The quarterly results benefited from a rise in revenues and higher non-operating income. Further, the assets under management (AUM) balance witnessed an improvement owing to net inflows. However, higher expenses acted as a dampener. Shares of BLK are trending marginally lower in the pre-market trading session today.
Net income attributable to BlackRock (on a GAAP basis) was $1.38 billion, rising 9.2% from the prior-year quarter. We had projected the metric to be $1.24 billion.
For 2023, adjusted earnings per share of $37.77 climbed 6.8% on a year-over-year basis and beat the consensus estimate of $36.91. Net income attributable to BlackRock (on a GAAP basis) was $5.50 billion, up 6.3%.
Concurrently, BlackRock entered into an agreement with Global Infrastructure Partners (“GIP”) to acquire GIP for $3 billion in cash and around 12 million shares of BlackRock common stock. GIP is the leading global independent infrastructure manager.
The combined entity is expected to have more than $150 billion in infrastructure client AUM across equity, debt and solutions. It will seek to deliver clients a market-leading, holistic infrastructure expertise across equity, debt and solutions at a substantial scale. The deal, expected to close in the third quarter of 2024, subject to customary regulatory approvals and other closing conditions, will likely be slightly accretive to BLK’s adjusted earnings in the first full year post-close.
The growing demand for infrastructure is leading to an acceleration in infrastructure investment. Against this backdrop, BLK’s move to acquire GIP will create a comprehensive global infrastructure franchise with differentiated origination and asset management capabilities. The diversified, large-scale sourcing is likely to support deal flow and co-investment opportunities for clients.
Revenues Improve, Expenses Rise
Revenues (on a GAAP basis) in the quarter were $4.63 billion, outpacing the Zacks Consensus Estimate of $4.61 billion. Moreover, the figure increased 6.8% year over year. The rise was mainly driven by an increase in total investment advisory, administration fees and securities lending revenues, investment advisory performance fees and technology services revenues.
For 2023, revenues (GAAP basis) declined marginally to $17.86 billion on a year-over-year basis. The top line surpassed the consensus estimate of $17.84 billion.
Total expenses amounted to $3.05 billion in the quarter, rising 4.7% from the prior-year quarter. The uptick was mainly due to a rise in all cost components except for restructuring charges. Our estimate for expenses was $2.99 billion.
Non-operating income (on a GAAP basis) was $342 million, significantly up from $225 million in the year-ago quarter. Our estimate for non-operating income was $128.6 million.
BlackRock’s adjusted operating income was $1.72 billion, climbing 8.8% from the prior-year period.
AUM Balance Up
As of Dec 31, 2023, AUM totaled $10 trillion, reflecting a year-over-year increase of 16.5%. Our estimate for AUM was $9.16 trillion. In the reported quarter, the company witnessed long-term net inflows of $63 billion.
Average AUM of $9.38 trillion as of Dec 31, 2023, rose 11.5% year over year. We had projected the average AUM to be $9.13 trillion.
Share Repurchase Update
BlackRock repurchased shares worth $1.5 billion in 2023.
Our View
BLK’s continued efforts to strengthen the iShares and ETF operations, along with its initiatives to restructure the actively managed equity business, are expected to remain tailwinds. The latest agreement to acquire Global Infrastructure Partners is likely to add to BlackRock's position as the global credit asset manager. However, the uncertain markets due to macroeconomic concerns have led to an unfavorable operating backdrop for the company.
Earnings Dates & Expectations of Other Asset Managers
Invesco (IVZ - Free Report) is scheduled to announce fourth-quarter 2023 numbers on Jan 23.
Over the past week, the Zacks Consensus Estimate for IVZ’s quarterly earnings has been raised 2.7% to 38 cents. However, the figure implies a fall of 2.6% from the prior-year reported number.
T. Rowe Price Group, Inc. (TROW - Free Report) is slated to report fourth-quarter 2023 results on Feb 8.
Over the past week, the Zacks Consensus Estimate for TROW’s quarterly earnings has moved 1.9% upward to $1.56. However, the figure indicates a 10.3% decline from the prior-year quarter.
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BlackRock (BLK) Tops Q4 Earnings Estimates, to Acquire GIP
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2023 adjusted earnings of $9.66 per share handily surpassed the Zacks Consensus Estimate of $8.84. The figure reflects an increase of 8.2% from the year-ago quarter.
The quarterly results benefited from a rise in revenues and higher non-operating income. Further, the assets under management (AUM) balance witnessed an improvement owing to net inflows. However, higher expenses acted as a dampener. Shares of BLK are trending marginally lower in the pre-market trading session today.
Net income attributable to BlackRock (on a GAAP basis) was $1.38 billion, rising 9.2% from the prior-year quarter. We had projected the metric to be $1.24 billion.
For 2023, adjusted earnings per share of $37.77 climbed 6.8% on a year-over-year basis and beat the consensus estimate of $36.91. Net income attributable to BlackRock (on a GAAP basis) was $5.50 billion, up 6.3%.
Concurrently, BlackRock entered into an agreement with Global Infrastructure Partners (“GIP”) to acquire GIP for $3 billion in cash and around 12 million shares of BlackRock common stock. GIP is the leading global independent infrastructure manager.
The combined entity is expected to have more than $150 billion in infrastructure client AUM across equity, debt and solutions. It will seek to deliver clients a market-leading, holistic infrastructure expertise across equity, debt and solutions at a substantial scale. The deal, expected to close in the third quarter of 2024, subject to customary regulatory approvals and other closing conditions, will likely be slightly accretive to BLK’s adjusted earnings in the first full year post-close.
The growing demand for infrastructure is leading to an acceleration in infrastructure investment. Against this backdrop, BLK’s move to acquire GIP will create a comprehensive global infrastructure franchise with differentiated origination and asset management capabilities. The diversified, large-scale sourcing is likely to support deal flow and co-investment opportunities for clients.
Revenues Improve, Expenses Rise
Revenues (on a GAAP basis) in the quarter were $4.63 billion, outpacing the Zacks Consensus Estimate of $4.61 billion. Moreover, the figure increased 6.8% year over year. The rise was mainly driven by an increase in total investment advisory, administration fees and securities lending revenues, investment advisory performance fees and technology services revenues.
For 2023, revenues (GAAP basis) declined marginally to $17.86 billion on a year-over-year basis. The top line surpassed the consensus estimate of $17.84 billion.
Total expenses amounted to $3.05 billion in the quarter, rising 4.7% from the prior-year quarter. The uptick was mainly due to a rise in all cost components except for restructuring charges. Our estimate for expenses was $2.99 billion.
Non-operating income (on a GAAP basis) was $342 million, significantly up from $225 million in the year-ago quarter. Our estimate for non-operating income was $128.6 million.
BlackRock’s adjusted operating income was $1.72 billion, climbing 8.8% from the prior-year period.
AUM Balance Up
As of Dec 31, 2023, AUM totaled $10 trillion, reflecting a year-over-year increase of 16.5%. Our estimate for AUM was $9.16 trillion. In the reported quarter, the company witnessed long-term net inflows of $63 billion.
Average AUM of $9.38 trillion as of Dec 31, 2023, rose 11.5% year over year. We had projected the average AUM to be $9.13 trillion.
Share Repurchase Update
BlackRock repurchased shares worth $1.5 billion in 2023.
Our View
BLK’s continued efforts to strengthen the iShares and ETF operations, along with its initiatives to restructure the actively managed equity business, are expected to remain tailwinds. The latest agreement to acquire Global Infrastructure Partners is likely to add to BlackRock's position as the global credit asset manager. However, the uncertain markets due to macroeconomic concerns have led to an unfavorable operating backdrop for the company.
BlackRock, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc. price-consensus-eps-surprise-chart | BlackRock, Inc. Quote
BlackRock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Other Asset Managers
Invesco (IVZ - Free Report) is scheduled to announce fourth-quarter 2023 numbers on Jan 23.
Over the past week, the Zacks Consensus Estimate for IVZ’s quarterly earnings has been raised 2.7% to 38 cents. However, the figure implies a fall of 2.6% from the prior-year reported number.
T. Rowe Price Group, Inc. (TROW - Free Report) is slated to report fourth-quarter 2023 results on Feb 8.
Over the past week, the Zacks Consensus Estimate for TROW’s quarterly earnings has moved 1.9% upward to $1.56. However, the figure indicates a 10.3% decline from the prior-year quarter.