Top-line growth aided by an increase in assets under management
) second-quarter adjusted earnings of $4.89 per share. It surpassed
the Zacks Consensus Estimate of $4.46 for the third consecutive
quarter. Further, this was up 18% from $4.15 per share earned
in the year-ago quarter.
Our proven model had also predicted that BlackRock will post an
earnings beat as it had the right combination of two key
ingredients - a positive
and a favorable Zacks Rank #2 (Buy).
Better-than-expected results were driven by revenue growth, partly
offset by higher expenses. Further, rise in AUM was a tailwind.
After considering certain non-recurring items, net income for
BlackRock came in at $808 million or $4.72 per share, up from $729
million or $4.19 per share in the year-ago quarter.
Quarter in Detail
Total revenue (on a GAAP basis) was $2.78 billion, increasing 12%
from the prior-year quarter. Higher long-term net inflows, increase
in performance fees and strength in BlackRock Solutions were the
primary growth drivers. Moreover, the reported figure came in
higher than the Zacks Consensus Estimate of $2.70 billion.
Total expenses were $1.66 billion, up 1% on a year-over-year basis.
The increase was mainly due to a rise in employee compensation and
benefits, and direct fund expenses, partially offset by a decrease
in general and administration expenses.
Non-operating expenses, net of non-controlling interests, were
recorded at $20 million, compared with non-operating income of $12
million in the prior-year quarter.
BlackRock's operating income, on a GAAP basis, was $1.12 billion,
increasing 32% from the year-ago quarter.
AUM totaled $4.59 trillion as of Jun 30, 2014, up 19% from the
year-ago period. Further, the company witnessed total long-term
inflows of $38.0 billion.
BlackRock bought back shares worth about $250 million in the
BlackRock's initiatives to improve exchange-traded fund (ETF)
business are commendable and will likely support its top line in
the upcoming quarters. Moreover, the company's organic as well
inorganic growth strategies, and steady capital deployment
activities seem impressive. On the flip side, continuously
increasing expenses and high dependence on fee-based revenues
remain causes of concern.
Among other investment managers,
Ameriprise Financial, Inc.
Waddell & Reed Financial, Inc.
) are scheduled to release results on Jul 29, while
) will report on Jul 31.
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