Top-line growth drove
The Blackstone Group L.P.
) first-quarter 2014 economic net income (ENI) of 70 cents per
share, which surpassed the Zacks Consensus Estimate by 25%. Also,
the figure was up 27% from 55 cents in the prior-year quarter.
Shares of Blackstone rose more than 4% in the pre-trading
session, reflecting an overwhelming response among investors. The
movement of the stock price when the trading session opens will
give a better idea about whether Blackstone has been able to meet
Better-than-expected results were attributable to revenue growth,
partly offset by higher expenses. Further, a rise in assets under
management (AUM) and an improved balance sheet were the other
Blackstone reported ENI of $813.9 million, up 30% from the
Behind the Headlines
Blackstone's total revenue increased 22% year over year to
$1,526.7 million. Moreover, it surpassed the Zacks Consensus
Estimate of $1,332.0 million. The rise was attributable to
increase in performance fees, investment income, management and
advisory fees as well as interest and dividend revenues. These
were partially offset by decline in other revenues.
Total expenses rose 6% from the prior-year quarter to $887.9
million. The rise was primarily due to increase in total
compensation and benefits costs as well as general,
administrative and other expenses. These were partially offset by
fall in other interest expenses and fund expenses.
Fee-earnings AUM grew 19% from the year-ago quarter to $203.6
billion. Total AUM as of Mar 31, 2014 was $271.7 billion, up 25%
year over year. The rise in AUM was primarily driven by $7.3
billion of market appreciation across all asset management
segments, partially offset by $1.3 billion of net outflows.
Capital and Liquidity
As of Mar 31, 2014, Blackstone had $1.9 billion in cash,
corporate treasury and liquid investments. Moreover, the company
had $8.2 billion in total cash and investments at the end of the
The company had no borrowings outstanding against its $1.1
billion revolving credit facility expiring in 2017.
The changing investor preference for alternative asset classes
and other risk management will continue to boost Blackstone's top
line in the forthcoming quarters. Further, we foresee steady
improvement in AUM backed by steady inflows in all the segments.
However, we are concerned about adverse effects of the ongoing
capital market volatility and stringent regulations. Both these
factors could weigh on the company's financial performance in the
Currently, Blackstone carries a Zacks Rank #3 (Hold).
Among other asset managers,
Ameriprise Financial, Inc.
) are scheduled to announce results on Apr 28 and May 1,
Franklin Resources Inc.
) will announce second-quarter fiscal 2014 results on Apr 28.
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