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AUM Growth Likely to Support BlackRock (BLK) in Q4 Earnings
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BlackRock, Inc. (BLK - Free Report) is slated to report fourth-quarter and 2022 results on Jan 13, before the opening bell. Its revenues and earnings for the quarter are expected to have witnessed year-over-year declines.
In third-quarter 2022, BLK’s earnings surpassed the Zacks Consensus Estimate. Results benefited from a decline in expenses. However, lower revenues and assets under management (AUM) balance were the major headwinds.
BlackRock has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, delivering a surprise of 6.3%, on average.
The company’s business activities and prospects in the to-be-reported quarter have not encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s fourth-quarter earnings of $7.84 has been unchanged over the past seven days. The figure indicates a decline of 24.8% from the year-ago quarter’s reported number. Our estimate for fourth-quarter earnings is $7.76.
The consensus estimate for fourth-quarter sales is pegged at $4.18 billion, which suggests a decline of 18.2% from the prior-year quarter’s reported number. Our estimate for sales is $4.16 billion.
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. 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.
Supported by expected asset inflows, BlackRock’s AUM balance is likely to have improved in the fourth quarter, positively impacting related fees. The Zacks Consensus Estimate for total AUM is pegged at $8.07 trillion, suggesting a sequential rise of 1.4%. Our estimate for total AUM for the fourth quarter is $8.03 trillion.
The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $144 million, indicating a rise of 75.6% from the previous quarter’s reported number. Our estimate for performance fees is $132.9 million.
The Zacks Consensus Estimate for total investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.33 billion, suggesting a sequential decline of 5.7%. Our estimate for the same is $3.36 billion.
The consensus estimate for distribution fees of $321 million indicates a decline of 1.2% from the previous quarter’s reported figure. Our estimate for the same is $329.4 million.
BlackRock’s expenses have been elevated over the past few years. Given that the company has been continuing 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 fourth quarter. Our estimate for fourth-quarter total expenses is $2.67 billion.
Earnings Whispers
According to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate for earnings 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 +3.06%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
A couple of 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, are The Bank of New York Mellon Corporation (BK - Free Report) and Hancock Whitney Corporation (HWC - Free Report) .
The Earnings ESP for BNY Mellon is +6.31% and it carries a Zacks Rank #3 at present. The company is slated to report fourth-quarter 2022 results on Jan 13.
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AUM Growth Likely to Support BlackRock (BLK) in Q4 Earnings
BlackRock, Inc. (BLK - Free Report) is slated to report fourth-quarter and 2022 results on Jan 13, before the opening bell. Its revenues and earnings for the quarter are expected to have witnessed year-over-year declines.
In third-quarter 2022, BLK’s earnings surpassed the Zacks Consensus Estimate. Results benefited from a decline in expenses. However, lower revenues and assets under management (AUM) balance were the major headwinds.
BlackRock has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, delivering a surprise of 6.3%, 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 not encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s fourth-quarter earnings of $7.84 has been unchanged over the past seven days. The figure indicates a decline of 24.8% from the year-ago quarter’s reported number. Our estimate for fourth-quarter earnings is $7.76.
The consensus estimate for fourth-quarter sales is pegged at $4.18 billion, which suggests a decline of 18.2% from the prior-year quarter’s reported number. Our estimate for sales is $4.16 billion.
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. 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.
Supported by expected asset inflows, BlackRock’s AUM balance is likely to have improved in the fourth quarter, positively impacting related fees. The Zacks Consensus Estimate for total AUM is pegged at $8.07 trillion, suggesting a sequential rise of 1.4%. Our estimate for total AUM for the fourth quarter is $8.03 trillion.
The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $144 million, indicating a rise of 75.6% from the previous quarter’s reported number. Our estimate for performance fees is $132.9 million.
The Zacks Consensus Estimate for total investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.33 billion, suggesting a sequential decline of 5.7%. Our estimate for the same is $3.36 billion.
The consensus estimate for distribution fees of $321 million indicates a decline of 1.2% from the previous quarter’s reported figure. Our estimate for the same is $329.4 million.
BlackRock’s expenses have been elevated over the past few years. Given that the company has been continuing 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 fourth quarter. Our estimate for fourth-quarter total expenses is $2.67 billion.
Earnings Whispers
According to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate for earnings 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 +3.06%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks Worth a Look
A couple of 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, are The Bank of New York Mellon Corporation (BK - Free Report) and Hancock Whitney Corporation (HWC - Free Report) .
The Earnings ESP for BNY Mellon is +6.31% and it carries a Zacks Rank #3 at present. The company is slated to report fourth-quarter 2022 results on Jan 13.
Hancock Whitney is scheduled to release fourth-quarter 2022 earnings on Jan 17. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +0.59%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.