4 Reasons Why BlackRock (BLK) Stock is an Attractive Pick Now
Despite the coronavirus outbreak-induced economic uncertainty, it seems to be a wise idea to add BlackRock, Inc. BLK stock to your portfolio now. The company's initiatives to restructure the active equity business are expected to continue to support its top-line growth. Moreover, its inorganic growth efforts bode well for the future.
The Zacks Consensus Estimate for its current-year earnings has been revised 3% upward over the past 30 days, reflecting analysts’ optimism regarding its earnings growth potential. Thus, the company currently sports a Zacks Rank #1 (Strong Buy).
Also, its price performance seems impressive. Shares of the company have gained 40.4% in the past three months, outperforming 28.4% growth recorded by the industry.
BlackRock has a number of other aspects that make it an attractive investment option right now.
Earnings Growth: In the last three to five years, the company witnessed earnings per share (EPS) growth of 10.5%, higher than the industry’s rise of 7%. While BlackRock’s earnings are projected to decline 6.2% in 2020, the same is expected to grow 13.4% in 2021.
Further, the company’s long-term (three to five years) expected EPS growth rate of 10% promises reward for investors.
Revenue Strength: Driven by a solid global presence, broad product diversification and steadily improving assets under management (AUM) balance, BlackRock’s revenues (on a GAAP basis) witnessed a six-year (2014-2019) CAGR of 5.6%.
While the current economic crisis, owing to the virus outbreak, will likely adversely impact AUM growth to some extent in the near term, the company’s efforts to strengthen the iShares and ETF operations, and increased focus on active equity business will likely continue to aid revenue growth. Although revenues are projected to decline marginally in 2020, the same is expected to improve 8.1% in 2021.
Strategic Acquisitions: Supported by a solid balance sheet position, BlackRock has expanded inorganically as well, which bodes well for the company in the future. In 2019, it acquired eFront. In 2018, it acquired Citibanamex’s Asset Management business in Mexico and Tennenbaum Capital. Apart from these, over the years, the company acquired several firms across the globe, thus, expanding its footprint and market share.
Superior Return on Equity (ROE): The company’s ROE of 13.62% is higher than the industry average of 12.55%. This shows that it reinvests its cash more efficiently compared with peers.
Other Stocks to Consider
Merchants Bancorp’s MBIN current-year earnings estimates have moved 11.9% upward over the past 60 days. The stock has depreciated 15% over the past six months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GAIN Capital Holdings’ GCAP current-year earnings estimates have moved up significantly over the past 60 days. Further, the company’s shares have gained 48.5% over the past six months. At present, it has a Zacks Rank #2.
West Bancorporation’s WTBA current-year earnings estimates have moved up 13.9% over the past 60 days. The company’s shares have declined 30.6% over the past six months. At present, it sports a Zacks Rank of 1.
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BlackRock, Inc. (BLK) : Free Stock Analysis Report
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