Impressive performance fees drove
The Blackstone Group L.P.
) second-quarter 2014 economic net income (ENI) of $1.15 per share,
which outpaced the Zacks Consensus Estimate by 64%. Also, the
figure was up 85% from 62 cents earned in the prior-year quarter.
At time of writing this article, shares of Blackstone rose nearly
3% in the pre-trading session, reflecting an overwhelming investor
response. Movement of the stock price after the trading session
opens will give a better idea about whether Blackstone has been
able to meet expectations.
Our quantitative model also conclusively projected that Blackstone
would beat the Zacks Consensus Estimate, as it had the right
combination of two key components - a positive
and a Zacks Rank #3 (Hold).
The Blackstone Group L P - Quarterly EPS (BNRI)
Better-than-expected results were attributable to top-line growth
driven by an impressive rise in performance fees. This was,
however, partly offset by higher expenses. Notably, a rise in
assets under management (AUM) and an improved balance sheet were
Blackstone reported ENI of $1.32 billion, up 89% from the
Behind the Headlines
Blackstone's total revenue increased 57% year over year to $2.26
billion. The rise was mainly attributable to drastic increase in
performance fees (up 95%) and total investment income (up 72%).
Moreover, it surpassed the Zacks Consensus Estimate of $1.54
Total expenses rose 19% from the prior-year quarter to $1.09
billion. All the expense components increased during the quarter.
Fee-earnings AUM grew 19% from the year-ago quarter to $209.9
billion. Total AUM as of Jun 30, 2014 was $278.9 billion, up 21%
year over year. The rise in AUM was primarily driven by $9.3
billion of market appreciation across all segments, partially
offset by $2.2 billion of net outflows.
As of Jun 30, 2014, Blackstone had $2.7 billion in cash, corporate
treasury and liquid investments. Moreover, the company had $8.6
billion in total cash and investments at the end of the quarter.
The changing investor preference for alternative asset classes and
other risk management strategies will likely continue to boost
Blackstone's top line in the forthcoming quarters. Further, we
foresee steady improvement in AUM backed by continued inflows in
all the segments.
However, we are concerned about adverse effects of the ongoing
capital market volatility and stringent regulations. These factors
could weigh on the company's financial performance in the near
Among other asset managers,
Ameriprise Financial, Inc.
) are scheduled to announce results on Jul 29 and Jul 31,
Franklin Resources Inc.
) will report third-quarter fiscal 2014 results on Jul 30.
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