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Growth in AUM Likely to Support BlackRock's (BLK) Q2 Earnings
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BlackRock, Inc. (BLK - Free Report) is slated to report second-quarter 2024 results on Jul 15 before the opening bell. Its revenues and earnings are expected to have improved in the quarter on a year-over-year basis.
In first-quarter 2024, 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 (AUM) 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 13%, on average.
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 second-quarter earnings of $10.02 has been revised 1% upward over the past seven days. The figure indicates a rise of 8% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $4.87 billion, which suggests a rise of 9.2% from the prior-year quarter’s reported number.
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 Q2
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 $10.48 trillion, suggesting a year-over-year rise of 11.2%. Our estimate for AUM is $10.19 trillion.
The Zacks Consensus Estimate for investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.92 billion, suggesting an 8.6% year-over-year rise. Our estimate for the same is pinned at $3.82 billion.
The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $197 million, indicating a rise of 67% from the previous-year quarter’s reported number. Our estimate for the same is pegged at $194.9 million.
The consensus estimate for distribution fee of $336 million suggests a rise of 5.3% from that reported in the previous year. We project the metric to be $328.5 million.
The consensus estimate for technology services revenues is pegged at $401 million, implying an 11.7% year-over-year rise. We project the metric to increase to $398.9 million.
The Zacks Consensus Estimate for advisory and other revenues is pegged at $60 million, which indicates a year-over-year rise of 7.1%. We project the metric to be $62.1 million.
BlackRock’s expenses have been elevated over the past few years. Overall costs are expected to have increased in the second 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 $3.05 billion, suggesting a year-over-year rise of 7%.
Key Developments in the Quarter
In June, BLK entered a strategic partnership with GeoWealth, a financial technology firm, to expand its capabilities to cater to the needs of clients in the $37-trillion U.S. wealth market.
Via GeoWealth’s platform, BLK aims to offer custom models, enabling advisors to address client demand for private markets, direct indexing and fixed-income separately managed accounts (SMAs) alongside traditional ETFs and mutual funds, all within a single account.
In May, BlackRock completed the acquisition of SpiderRock Advisors, LLC, which is a leading provider of option overlay-based strategies for SMAs. This strengthened BLK’s capabilities to provide a robust platform to its clients with customized SMA solutions.
The deal (announced in March 2024) was an extension of BlackRock’s minority investment of 25% in the firm in 2021 and reinforced its commitment to personalized SMAs.
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 are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BlackRock is +3.78%.
Zacks Rank: The company currently carries a Zacks Rank #3.
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 Ally Financial Inc. (ALLY - Free Report) .
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Growth in AUM Likely to Support BlackRock's (BLK) Q2 Earnings
BlackRock, Inc. (BLK - Free Report) is slated to report second-quarter 2024 results on Jul 15 before the opening bell. Its revenues and earnings are expected to have improved in the quarter on a year-over-year basis.
In first-quarter 2024, 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 (AUM) 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 13%, 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 second-quarter earnings of $10.02 has been revised 1% upward over the past seven days. The figure indicates a rise of 8% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $4.87 billion, which suggests a rise of 9.2% from the prior-year quarter’s reported number.
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 Q2
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 $10.48 trillion, suggesting a year-over-year rise of 11.2%. Our estimate for AUM is $10.19 trillion.
The Zacks Consensus Estimate for investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.92 billion, suggesting an 8.6% year-over-year rise. Our estimate for the same is pinned at $3.82 billion.
The Zacks Consensus Estimate for the company’s investment advisory performance fees is pegged at $197 million, indicating a rise of 67% from the previous-year quarter’s reported number. Our estimate for the same is pegged at $194.9 million.
The consensus estimate for distribution fee of $336 million suggests a rise of 5.3% from that reported in the previous year. We project the metric to be $328.5 million.
The consensus estimate for technology services revenues is pegged at $401 million, implying an 11.7% year-over-year rise. We project the metric to increase to $398.9 million.
The Zacks Consensus Estimate for advisory and other revenues is pegged at $60 million, which indicates a year-over-year rise of 7.1%. We project the metric to be $62.1 million.
BlackRock’s expenses have been elevated over the past few years. Overall costs are expected to have increased in the second 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 $3.05 billion, suggesting a year-over-year rise of 7%.
Key Developments in the Quarter
In June, BLK entered a strategic partnership with GeoWealth, a financial technology firm, to expand its capabilities to cater to the needs of clients in the $37-trillion U.S. wealth market.
Via GeoWealth’s platform, BLK aims to offer custom models, enabling advisors to address client demand for private markets, direct indexing and fixed-income separately managed accounts (SMAs) alongside traditional ETFs and mutual funds, all within a single account.
In May, BlackRock completed the acquisition of SpiderRock Advisors, LLC, which is a leading provider of option overlay-based strategies for SMAs. This strengthened BLK’s capabilities to provide a robust platform to its clients with customized SMA solutions.
The deal (announced in March 2024) was an extension of BlackRock’s minority investment of 25% in the firm in 2021 and reinforced its commitment to personalized SMAs.
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 are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BlackRock is +3.78%.
Zacks Rank: The company currently carries a Zacks Rank #3.
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 Ally Financial Inc. (ALLY - Free Report) .
BK is scheduled to release quarterly earnings on Jul 12. The company has a Zacks Rank #3 and an Earnings ESP of +0.65% at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for ALLY is +2.99% and it carries a Zacks Rank #3 at present. The company is slated to report quarterly results on Jul 17.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.