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Weak Market Performance to Hurt BlackRock's (BLK) Q1 Earnings
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BlackRock, Inc. (BLK - Free Report) is slated to report first-quarter 2023 results on Apr 14 before the opening bell. Its revenues and earnings are expected to have witnessed year-over-year declines.
In fourth-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 8.8%, 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 first-quarter earnings of $7.90 has been unchanged over the past seven days. The figure indicates a decline of 17% from the year-ago quarter’s reported number. Our estimate for first-quarter earnings is $7.37.
The consensus estimate for first-quarter sales is pegged at $4.24 billion, which suggests a decline of 9.9% from the prior-year quarter’s reported number. Our estimate for sales is $4.17 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 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. 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.
Despite expected inflows, asset balances are not expected to have improved much in the to-be-reported quarter because of weak market performance. Thus, BlackRock’s AUM balance is likely to have been negatively impacted. The Zacks Consensus Estimate for total AUM is pegged at $8.59 trillion, suggesting a marginal sequential decline. Our estimate for total AUM for the first quarter is $8.07 trillion, reflecting a sequential decline of 6.1%.
Because of the decline in AUM, the related fee is expected to have been negatively impacted. The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $106 million, indicating a decline of 53.5% from the previous quarter’s reported number. Our estimate for performance fees is $120.8 million, suggesting a sequential decline of 47%.
The Zacks Consensus Estimate for investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.42 billion, suggesting a marginal sequential rise. Our estimate for the same is $3.37 billion.
The consensus estimate for distribution fees of $320 million indicates a rise of 1.9% from the previous quarter’s reported figure. Our estimate for the same is $321.8 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 first quarter. Our estimate for first-quarter total expenses is $2.79 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 +4.16%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Other Stocks Worth a Look
A couple of other finance stocks, which 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 BankUnited (BKU - Free Report) .
The Earnings ESP for BNY Mellon is +2.58% and it carries a Zacks Rank #3 at present. The company is slated to report first-quarter 2023 results on Apr 18.
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Weak Market Performance to Hurt BlackRock's (BLK) Q1 Earnings
BlackRock, Inc. (BLK - Free Report) is slated to report first-quarter 2023 results on Apr 14 before the opening bell. Its revenues and earnings are expected to have witnessed year-over-year declines.
In fourth-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 8.8%, 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 to-be-reported quarter have not encouraged analysts to revise earnings estimates upward. The Zacks Consensus Estimate for BlackRock’s first-quarter earnings of $7.90 has been unchanged over the past seven days. The figure indicates a decline of 17% from the year-ago quarter’s reported number. Our estimate for first-quarter earnings is $7.37.
The consensus estimate for first-quarter sales is pegged at $4.24 billion, which suggests a decline of 9.9% from the prior-year quarter’s reported number. Our estimate for sales is $4.17 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 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. 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.
Despite expected inflows, asset balances are not expected to have improved much in the to-be-reported quarter because of weak market performance. Thus, BlackRock’s AUM balance is likely to have been negatively impacted. The Zacks Consensus Estimate for total AUM is pegged at $8.59 trillion, suggesting a marginal sequential decline. Our estimate for total AUM for the first quarter is $8.07 trillion, reflecting a sequential decline of 6.1%.
Because of the decline in AUM, the related fee is expected to have been negatively impacted. The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $106 million, indicating a decline of 53.5% from the previous quarter’s reported number. Our estimate for performance fees is $120.8 million, suggesting a sequential decline of 47%.
The Zacks Consensus Estimate for investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.42 billion, suggesting a marginal sequential rise. Our estimate for the same is $3.37 billion.
The consensus estimate for distribution fees of $320 million indicates a rise of 1.9% from the previous quarter’s reported figure. Our estimate for the same is $321.8 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 first quarter. Our estimate for first-quarter total expenses is $2.79 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 +4.16%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Other Stocks Worth a Look
A couple of other finance stocks, which 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 BankUnited (BKU - Free Report) .
The Earnings ESP for BNY Mellon is +2.58% and it carries a Zacks Rank #3 at present. The company is slated to report first-quarter 2023 results on Apr 18.
BankUnited is expected to release first-quarter 2023 earnings on Apr 20. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +4.84%. 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.