BlackRock BLK seems well positioned for top-line growth, supported by strategic acquisitions. Moreover, its initiatives to restructure the actively managed equities business remain impressive.
The company has been witnessing upward earnings estimate revisions of late, reflecting that analysts are optimistic regarding its earnings growth potential. Its Zacks Consensus Estimate for current-year earnings has been revised upward by nearly 1.1%. Thus, the stock currently carries a Zacks Rank #2 (Buy).
Moreover, it has a decent price performance. Shares of BlackRock have gained 11.4% over the past three months compared with the industry’s growth of 15.4%.
Looking at the fundamentals, the company’s assets under management (AUM) witnessed a five-year CAGR of 6.5% (2014-2018). Moreover, its revenues (on a GAAP basis) witnessed a CAGR of 6.4% over the same time frame. Given the gradual improvement in market conditions, efforts to strengthen iShares and ETF operations, higher AUM, and increased focus on active equity business, the company’s revenues are expected to increase further.
Moreover, BlackRock has expanded largely via acquisitions. In March, it announced a deal to buy 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. With a strong liquidity position, BlackRock remains well positioned to grow through acquisitions.
Further, given a solid capital position, the company is expected to continue boosting shareholder value through efficient capital-deployment activities.
However, a steady increase in operating expenses and BlackRock's high dependence on overseas revenues remain matters of concern and might hamper financials to some extent.
Some other top-ranked stocks from the same space are Federated Investors, Inc. FII, Ares Management ARES and Affiliated Managers Group, Inc. AMG.
Federated Investors currently sports a Zacks Rank #1 (Strong Buy). It has witnessed an upward earnings estimate revision of nearly 4.3% for the current year, over the past 60 days. Its shares have gained 14.5% over the past three months.
The Zacks Consensus Estimate for earnings for Ares Management has increased 6.2% over the past 60 days. Its shares have gained 31.4% over the past three months. The stock currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Affiliated Managers’ earnings estimates for the current year have been revised upward by 1% over the past 60 days. Its shares have gained 10.6% over the past three months. The stock presently has a Zacks Rank #2.
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