Benzinga - by Zacks, Benzinga Contributor.
BlackRock, Inc. (NYSE: BLK) is slated to report first-quarter 2024 results on Apr 12 before the opening bell. Its revenues and earnings are expected to have improved in the quarter on a year-over-year basis.
In fourth-quarter 2023, BLK's earnings surpassed the Zacks Consensus Estimate. Results benefited from a rise in revenues and higher non-operating income. Further, the assets under management balance witnessed improvement owing to net inflows.
BlackRock has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering a surprise of 12.6%, 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 have encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock's first-quarter earnings of $9.36 has been revised 1.3% upward over the past seven days. The figure indicates a rise of 18% from the year-ago quarter's reported number. Our estimate for first-quarter earnings is pinned at $9.
The consensus estimate for sales is pegged at $4.67 billion, which suggests a rise of 10.2% from the prior-year quarter's reported number. Our estimate for sales is pinned at $4.60 billion.
Before we take a look at what our quantitative model predicts for the to-be-reported quarter, let us discuss the factors that are likely to have impacted the company's quarterly performance.
Key Factors & Estimates for Q1 BlackRock has been a dominant player in the exchange traded fund ("ETF") market, given its continued investments in the U.S. iShare core ETFs. As investors have kept 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, with the trend expected to have continued in the to-be-reported quarter.
Thus, driven by expected inflows, BLK's AUM balance is likely to have increased. The Zacks Consensus Estimate for total AUM is pegged at $10.2 trillion, suggesting a year-over-year rise of 11.6%.
The Zacks Consensus Estimate for investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.82 billion, suggesting an 8.9% year-over-year rise. Our estimate for the same is pinned at $3.69 billion, implying a rise of 5.3%.
The Zacks Consensus Estimate for the company's investment advisory performance fees is pegged at $120 million, indicating a significant rise from the previous-year quarter's reported number. Our estimate for the same is pegged at $163.3 million.
The consensus estimate for distribution fee of $330 million suggests a rise of 3.4% from the previous year. We project the metric to be $314 million.
The consensus estimate for technology services revenues is pegged at $386 million, implying a 13.5% year-over-year rise. We project the metric to increase to $405.2 million.
BlackRock's expenses have been elevated over the past few years. Overall costs are expected to have increased in the first quarter, given that the company has been continuing its restructuring initiatives to modify the size and shape of its workforce and improve operating efficiency. Our estimate for total expenses is pinned at $3 billion, suggesting a year-over-year rise of 6.9%.
Key Developments in the Quarter In January, BlackRock entered an agreement to acquire GIP for $3 billion in cash and around 12 million shares of BlackRock's 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, will likely be slightly accretive to BLK's adjusted earnings in the first full year post-close.
In March, BlackRock announced plans to acquire the remaining 75% equity stake in SpiderRock Advisors, a leading provider of customized option overlay strategies in the U.S. wealth market. The deal is expected to close in the second quarter of 2024 and is subject to customary approvals.
This transaction is an extension of BlackRock's minority investment of 25% in the firm in 2021 and reinforces its commitment to personalized, separately managed accounts.
Earnings Whispers According to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate for earnings 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.
Earnings ESP: The Earnings ESP for BlackRock is -0.22%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look A couple of finance stocks, which 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, are The Charles Schwab Corporation (NYSE: SCHW) and Zions Bancorporation, National Association (NASDAQ: ZION).
SCHW is scheduled to release quarterly earnings on Apr 15. The company has a Zacks Rank #3 and an Earnings ESP of +0.30% at present.
The Earnings ESP for ZION is +1.86% and it carries a Zacks Rank #3 at present. The company is slated to report quarterly results on Apr 22.
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