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Growth in AUM Likely to Support Blackstone's (BX) Q2 Earnings

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Blackstone (BX - Free Report) is scheduled to report second-quarter 2022 results on Jul 21, before the opening bell. Its revenues and earnings are likely to have increased in the to-be-reported quarter on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results primarily benefited from an improvement in revenues. A rise in assets under management (AUM) balance, mainly driven by inflows, was a positive.

Blackstone has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.8%.

Blackstone Inc. Price and EPS Surprise

 

Blackstone Inc. Price and EPS Surprise

Blackstone Inc. price-eps-surprise | Blackstone Inc. Quote

Business prospects and activities of the company in the second quarter did not win analysts’ confidence. As a result, the Zacks Consensus Estimate for its second-quarter earnings of $1.47 per share has been revised 4.5% lower over the past seven days. The figure indicates a rise of 79.3% from the prior-year quarter.

The consensus estimate for sales is pegged at $3.48 billion, which suggests an increase of 64.5% from the year-ago quarter’s reported figure.

Now, let’s check the factors that are expected to have influenced the company’s second-quarter performance.

Key Factors and Estimates for Q2

Blackstone has been witnessing a rise in fee-earning AUM and total AUM for the past few years on the back of its diversified product and revenue mix, a superior position in the alternative investments space, and net inflows. A similar trend is likely to have continued in the to-be-reported quarter.

After witnessing the gradual normalization in the second half of 2021, trading activities surprisingly rebounded in the first quarter of 2022, with a similar trend continuing into the second quarter. The Russia-Ukraine conflict continued to disrupt supply chains, leading to global ambiguity. Further, fears of an economic slowdown, 40-year-high inflation numbers, and rising interest rates worldwide resulted in heightened client activity and increased trading volume.

These factors led to higher volatility in the equity markets (with the S&P 500 Index recording the worst first-half performance in more than 50 years) and other asset classes, including bonds, commodities and foreign exchange. Thus, supported by the rise in client activity and expected asset inflows, Blackstone is likely to have recorded growth in the AUM balance.

The Zacks Consensus Estimate for Blackstone’s second-quarter AUM is pegged at $957 billion, which indicates a rise of 39.9% from the prior-year quarter’s reported figure. Also, the consensus estimate for total fee-earning AUM of $703 billion suggests a year-over-year rise of 40.9%.

The Zacks Consensus Estimate for net management and advisory fees (segment revenues) for the to-be-reported quarter is pegged at $1.62 billion, which indicates a rise of 33.1% from the prior-year quarter.

The consensus estimate for fee-related performance revenues (segment revenues) of $402 million suggests a significant rise.

Blackstone’s expenses have been elevated over the past few years mainly because of higher general, administrative and other expenses. As the company has been continuing to make investments in franchise, expenses are expected to have risen to some extent in the second quarter.

Here is what our quantitative model predicts:

According to our quantitative model, the chances of Blackstone beating the Zacks Consensus Estimate this time are low. That is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better.

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 Blackstone is -0.12%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks That Warrant 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 Bank OZK (OZK - Free Report) and Regions Financial (RF - Free Report) .

Bank OZK is scheduled to release second-quarter 2022 earnings on Jul 21. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.69%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for Regions Financial is +0.89% and it carries a Zacks Rank #3 at present. The company is slated to report results on Jul 22.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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