Significant improvement in revenues across all the segments
The Blackstone Group L.P.
) fourth-quarter 2013 economic net income (ENI) of $1.35 cents
per share. This was well ahead of the Zacks Consensus Estimate of
81 cents and compared favorably with ENI of 59 cents in the
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Notably, the Private Equity and Real Estate segment performed
remarkably well with revenues increasing 128% and 239%,
respectively. The improvement was attributable to favorable
investment market as well as the company's diversified
For the full year 2013, Blackstone recorded earnings per share of
$3.07 versus $1.77 in 2012. Moreover, earnings for the year
surpassed the Zacks Consensus Estimate of $2.51.
In the pre-trading session, Blackstone's stock price shot up more
than 6.0%, reflecting an overwhelming response among investors.
Overall positive market sentiment could be a contributing factor
toward the price appreciation. However, nothing can be inferred
conclusively till we observe the company's share price movement
during the trading session.
Results benefited from growth in top line, partially offset by
higher expenses. Further, a rise in assets under management (AUM)
and an improved balance sheet were the tailwinds for the quarter.
Blackstone reported ENI of $1,542.1 million, rising significantly
from $670.0 million in the prior-year quarter. Moreover, for the
full year, net income came in at $3,513.9 million, up from
$1,995.3 million in 2012.
Behind the Headlines
Blackstone's total revenue increased to $2,693.2 million from
$1,228.7 million in fourth-quarter 2012. Moreover, it surpassed
the Zacks Consensus Estimate of $1,440.0 million. The
year-over-year rise was mainly due to an increase in performance
fees, investment income as well as interest and dividend
revenues. These positives were partially offset by decline in
other revenues as well as management and advisory fees.
For the full year, total revenue was $6,611.5 million, up 62.6%
from $4,066.8 million in 2012. Moreover, total revenue surpassed
the Zacks Consensus Estimate of $5,034.0 million.
However, total expenses disappointingly rose more than 100% to
$1,109.9 million from the prior-year quarter figure of $542.7
million. The rise was primarily due to increase in total
compensation and benefits expenses, partially offset by lower
other operating expenses.
Fee-earnings AUM rose 18% from the year-ago quarter to $198.0
Total AUM as of Dec 31, 2013 was $265.8 billion, up 26% from
$210.2 billion as of Dec 31, 2012. The rise was primarily driven
by $60 billion of gross inflows and $38 billion of market
appreciation across all asset management segments.
Capital and Liquidity
As of Dec 31, 2013, Blackstone had $2.1 billion in cash,
corporate treasury and liquid investments. Moreover, the company
had $8.3 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.
Along with the earnings release, Blackstone announced a quarterly
distribution of 58 cents per unit, up nearly 152% from prior
payout. The distribution will be exercised on Feb 18 to
stockholders of record as of Feb 10.
Performance of Other Asset Managers
) adjusted earnings surpassed the Zacks Consensus Estimate owing
to an improvement in AUM.
T. Rowe Price Group, Inc.
SEI Investments Co.
) also delivered positive earnings surprises on the back of
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 aided by steady inflows in all the segments.
On the flip side, we are concerned about the adverse effects of
the ongoing capital market volatility and stringent regulations.
Both these factors could weigh on the company's financial
performance in the near term.
Currently, Blackstone carries a Zacks Rank #3 (Hold).