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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 2020 results on Jan 14, before the opening bell. Its revenues and earnings in the to-be-reported quarter are expected to have improved on a year-over-year basis.
In third-quarter 2020, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues, partly offset by higher expenses. Further, 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 three and lagged in one of the trailing four quarters, with a surprise of 9.8%, on average.
The company’s business activities and prospects in the fourth quarter encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for the company’s earnings of $8.61 for the to-be-reported quarter has moved marginally upward over the past 30 days. Also, the figure indicates a rise of 3.2% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $4.27 billion, which suggests an increase of 7.4% 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. Moreover, 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, despite lingering concerns related to the pandemic, the fourth quarter witnessed decent asset inflows. Thus, supported by inflows, BlackRock’s AUM is expected to have improved in the quarter.
The Zacks Consensus Estimate for AUM for the fourth quarter is pegged at $8.33 trillion, indicating a rise of 6.7% from the previous quarter’s reported number.
Notably, driven by an expected increase in AUM, the related fee is also expected to have been positively impacted.
The consensus estimate for total investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.47 billion, suggesting a sequential increase of 7.6%.
The consensus estimate of distribution fee of $299 million indicates a rise of 3.8% from the previous quarter. The consensus estimate for technology services revenues is pegged at $301 million, which suggests a rise of 6.7% from the previous quarter’s reported number.
However, the consensus estimate for investment advisory performance fees of $277 million indicates a decline of 47.9% from the previous quarter’s reported number.
BlackRock’s expenses have been elevated over the past few years. As the company has been continuing 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 to-be-reported quarter as well.
Notably, management expects core general and administration expenses in 2020 to be up 2% year over year.
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 +4.62%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
Here are some other finance stocks that 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.
The Earnings ESP for Commerce Bancshares, Inc. (CBSH - Free Report) is +0.99% and it carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Jan 20.
BankUnited, Inc. (BKU - Free Report) is slated to release earnings figures on Jan 21. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.46%.
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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 2020 results on Jan 14, before the opening bell. Its revenues and earnings in the to-be-reported quarter are expected to have improved on a year-over-year basis.
In third-quarter 2020, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues, partly offset by higher expenses. Further, 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 three and lagged in one of the trailing four quarters, with a surprise of 9.8%, 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 fourth quarter encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for the company’s earnings of $8.61 for the to-be-reported quarter has moved marginally upward over the past 30 days. Also, the figure indicates a rise of 3.2% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $4.27 billion, which suggests an increase of 7.4% 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. Moreover, 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, despite lingering concerns related to the pandemic, the fourth quarter witnessed decent asset inflows. Thus, supported by inflows, BlackRock’s AUM is expected to have improved in the quarter.
The Zacks Consensus Estimate for AUM for the fourth quarter is pegged at $8.33 trillion, indicating a rise of 6.7% from the previous quarter’s reported number.
Notably, driven by an expected increase in AUM, the related fee is also expected to have been positively impacted.
The consensus estimate for total investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.47 billion, suggesting a sequential increase of 7.6%.
The consensus estimate of distribution fee of $299 million indicates a rise of 3.8% from the previous quarter. The consensus estimate for technology services revenues is pegged at $301 million, which suggests a rise of 6.7% from the previous quarter’s reported number.
However, the consensus estimate for investment advisory performance fees of $277 million indicates a decline of 47.9% from the previous quarter’s reported number.
BlackRock’s expenses have been elevated over the past few years. As the company has been continuing 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 to-be-reported quarter as well.
Notably, management expects core general and administration expenses in 2020 to be up 2% year over year.
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 +4.62%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
Here are some other finance stocks that 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.
The Earnings ESP for Commerce Bancshares, Inc. (CBSH - Free Report) is +0.99% and it carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Jan 20.
BankUnited, Inc. (BKU - Free Report) is slated to release earnings figures on Jan 21. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.46%.
Capital One Financial Corporation (COF - Free Report) is slated to release earnings figures on Jan 26. The company currently carries a Zacks Rank #2 and has an Earnings ESP of +3.50%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>