BlackRock Beats Earnings on Improved AUM - Analyst Blog

By Zacks Equity Research,

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The improvement in equity markets drove BlackRock, Inc. 's ( BLK ) fourth-quarter adjusted earnings of $4.92 per share, which significantly surpassed the Zacks Consensus Estimate of $4.38. Further, this was up 24% from $3.96 earned in the year-ago quarter.

Despite negative market sentiment, shares of BlackRock gained more than 3% in the pre-trading session, indicating investors' positive response following the release. The movement of the stock price when the trading session opens will give a better idea about whether BlackRock has been able to meet expectations.

Better-than-expected results were attributable to rise in revenues, partly offset by higher operating expenses. Further, significant growth in assets under management (AUM) was a tailwind. Moreover, a hike in quarterly dividend reflecting the company's strong liquidity position.

After considering certain non-recurring items, net income attributable to BlackRock in the reported quarter was $841 million or $4.86 per share, up from $690 million or $3.93 per share in the year-ago quarter.

For the full year 2013, adjusted earnings per share were $16.58, up 21% year over year. This also outpaced the Zacks Consensus Estimate of $16.05.

Quarter in Detail

Total revenue was $2.78 billion, increasing 14% from the prior-year quarter. Higher long-term net inflows, improvement in markets, increase in performance fees and strength in BlackRock Solutions were the primary growth drivers. Further, the reported figure came ahead of the Zacks Consensus Estimate of $2.72 billion.

Total expenses were at $1.64 billion, up 7% on a year-over-year basis. The increase was mainly due to rise in employee compensation and benefits.

Non-operating income, net of non-controlling interests, was recorded at $15 million, compared with non-operating expense of $107 million in the prior-year quarter.

BlackRock's operating income, on a GAAP basis, was $1.13 billion, increasing 13% from the year-ago quarter.

AUM totaled $4.32 trillion as of Dec 31, 2013, up 14% from the year-ago period. Further, the company witnessed total long-term inflows of $40.5 trillion in the reported quarter.

Share Repurchases

BlackRock repurchased about $250 million shares in the reported quarter. Thus, for the full year, the company bought back $1 billion worth of shares.


Along with the earnings release, BlackRock announced a 15% increase in its quarterly cash dividend to $1.93 per share. The dividend will be paid on Mar 24 to shareholders of record on Mar 7.

Our Viewpoint

BlackRock's strong capital deployment as well as organic and inorganic activities are expected to benefit the company going forward. Moreover, its initiatives to increase market share in the ETF business is commendable. However, continuously increasing expenses and high dependence on fee-based revenues remain causes of concern.

BlackRock currently carries a Zacks Rank #3 (Hold).

Among other investment management firms, Invesco Ltd. ( IVZ ) is scheduled to release results on Jan 30, while Ameriprise Financial, Inc. ( AMP ) and Waddell & Reed Financial, Inc. ( WDR ) will report on Feb 4.

AMERIPRISE FINL (AMP): Free Stock Analysis Report

BLACKROCK INC (BLK): Free Stock Analysis Report

INVESCO LTD (IVZ): Free Stock Analysis Report

WADDELL&REED -A (WDR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: AMP , BLK , IVZ , WDR

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