BlackRock, Inc.’s BLK initiatives to restructure its actively managed equities business with an aim to meet changing client needs positions it well for top-line growth in the future. Also, supported by a solid balance sheet position, the company remains on track for growth through acquisitions.
Thus, given the company’s strong fundamentals and good growth prospects, adding the stock to your portfolio seems a wise idea now.
Shares of the company gained 35% in 2017, outperforming 31.2% rally for the industry it belongs to.
Moreover, its Zacks Consensus Estimate for current-year earnings has been revised 2.6% upward over the last 30 days, reflecting analysts’ optimism regarding its earnings growth potential. Thus, the stock carries a Zacks Rank #2 (Buy).
Notably, BlackRock has a number of other aspects that make it an attractive investment option right now.
Why BlackRock is a Must Buy
Earnings Per Share (EPS) Growth: In the last three to five years, BlackRock witnessed EPS growth of 7.1%, higher than the industry’s growth of 4.6%. Moreover, the company’s earnings are projected to grow 26.2% and 10.7% in 2018 and 2019, respectively.
Further, its long-term (three to five years) expected EPS growth of 13.1% promises reward for shareholders.
Revenue Strength: Driven by a solid global presence that allows broad diversification and organic growth, BlackRock’s revenues (on GAAP basis) witnessed a six-year CAGR of 6% (2012-2017). Also, the top line is anticipated to grow nearly 11.8% in 2018, higher than the industry average of 6.9%. This indicates its superiority in generating revenues.
Impressive Capital Deployment Activities: Driven by its capital strength, BlackRock’s capital deployment activities remain impressive. In January 2018, the company announced a 15% dividend hike and it has a share buyback plan in place. With a sturdy capital position, the company will likely continue rewarding shareholders through strategic capital deployment.
Strategic Acquisitions: BlackRock has expanded primarily via acquisitions, with majority of its assets under management (AUM) growth driven by the same. In 2017, it acquired the First Reserve Energy Infrastructure Funds and completed the deal to acquire financial technology provider — Cachematrix, while it has acquired several global and domestic firms over the years. Also, the company has recently agreed to acquire Citibanamex’s Asset Management business. All these are anticipated to support the company’s AUM growth.
Other Stocks to Consider
Other top-ranked stocks in the same space are Legg Mason, Inc. LM, Federated Investors, Inc. FII and Affiliated Managers Group, Inc. AMG.
Legg Mason’s earnings estimates have been revised 18.4% upward for the current fiscal year in the past 30 days. Also, its share price has increased 6.5% over the last year. The stock currently sports a Zacks Rank #1 (Strong Buy).
Federated Investors’ earnings estimates for the current year have been revised 1.8% upward, over the last 30 days. Further, in a year’s time, the company’s shares have jumped 22.2%. It also carries a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Affiliated Managers has a Zacks Rank #2. Its earnings estimates have been revised 2.9% upward for 2018, in 30 days’ time. Also, its share price increased 6.8% over the past year.
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