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BlackRock (BLK) Up 2.7% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for BlackRock, Inc.BLK . Shares have added about 2.7% in that time frame, underperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

BlackRock Beats on Q4 Earnings, Expenses Decline

BlackRock reported fourth-quarter 2016 adjusted earnings of $5.14 per share, which handedly surpassed the Zacks Consensus Estimate of $5.02. Moreover, the bottom line came in 8% higher than the year-ago quarter.

The better-than-expected number was primarily driven by a decline in total expenses. Also, higher revenues for the quarter acted as a tailwind. Further, assets under management (AUM) experienced a year-over-year rise and the company witnessed strong inflows during the quarter.

Net income (on a GAAP basis) came in at $851 million for the quarter, down 1% from the prior-year quarter.

The company's full-year 2016 adjusted earnings of $19.29 per share also surpassed the Zacks Consensus Estimate of $19.21. However, the reported figure represents a year-over-year decline of 2%. Net income for 2016 was $3.17 billion, down 5% year over year.

Revenues Increase & Expenses Decline

Revenues for the quarter inched up 1% year over year to $2.89 billion. The rise was due to an increase in all the components except investment advisory performance fees and distribution fees. However, the reported figure missed the Zacks Consensus Estimate of $2.94 billion.

Revenues for 2016 came in at $11.16 billion, down 2% year over year. Also, the reported figure missed the Zacks Consensus Estimate of $11.19 billion.

Total expenses amounted to $1.67 billion, down 3.5% year over year. There was a decline in almost all the expense components except distribution and servicing costs.

Non-operating expense (on a GAAP basis) came in at $38 million, as against non-operating income of $11 million in the year-ago period. BlackRock's adjusted operating income came in at $1.23 billion, up 8% year over year.

Strong AUM & Inflows

As of Dec 31, 2016, AUM totaled $5.1 trillion, up 11% year over year. Further, during the reported quarter, the company witnessed long-term net inflows of $87.86 billion.

Capital Deployment Plans

During the year, BlackRock returned $2.7 billion to its shareholders.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend for fresh estimates. There has been one revision lower for the current quarter. While looking back an additional 30 days, we can see even more downward momentum. There have been three downward revisions in the last two months.

BlackRock, Inc. Price and Consensus

BlackRock, Inc. Price and Consensus | BlackRock, Inc. Quote

VGM Scores

At this time, BlackRock's stock has a poor grade of 'F' on both the Growth and Momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregte VGM score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

While estimates have been broadly trending downward for the stock, the magnitude of the revisions indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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


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

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