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Asset Growth Likely to Aid Blackstone (BX) in Q4 Earnings

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·4 min read
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Blackstone BX is scheduled to report fourth-quarter and 2021 results on Jan 27, before the opening bell. Its revenues and earnings are likely to have increased in the to-be-reported quarter on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results primarily benefited from an improvement in revenues. A rise in assets under management (AUM) balance, mainly driven by inflows, was a positive.

Blackstone has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 23.7%.

Blackstone Inc. Price and EPS Surprise

Blackstone Inc. Price and EPS Surprise
Blackstone Inc. Price and EPS Surprise

Blackstone Inc. price-eps-surprise | Blackstone Inc. Quote

Business prospects and activities of the company in the fourth quarter won analysts’ confidence. As a result, the Zacks Consensus Estimate for its fourth-quarter earnings of $1.34 per share has been revised 5.5% upward over the past 30 days. The figure indicates a rise of 18.6% from the prior-year quarter’s reported number.

The consensus estimate for sales is pegged at $3.10 billion, which suggests an increase of 10.7% from the year-ago quarter’s reported figure.

Now, let’s check the factors that are expected to have influenced the company’s fourth-quarter performance.

Key Factors and Estimates for Q4

Blackstone has been witnessing a rise in fee-earning AUM and total AUM for the past few years on the back of its diversified product and revenue mix, a superior position in the alternative investments space, and net inflows. A similar trend is likely to have continued in the to-be-reported quarter.

Unlike 2020 and the first few months of 2021, the fourth quarter did not record a significant rise in market volatility. Despite relatively lower volatility and market normalization, client activity was decent. Also, the quarter witnessed overall asset inflows, which is expected to have aided Blackstone’s AUM growth.

The Zacks Consensus Estimate for Blackstone’s fourth-quarter AUM is pegged at $826 billion, which indicates a rise of 13% from the previous quarter’s reported figure. Also, the consensus estimate for total fee-earning AUM of $554 billion suggests a sequential rise of 4.9%.

The Zacks Consensus Estimate for net management and advisory fees (segment revenues) for the to-be-reported quarter is pegged at $1.32 billion, which indicates no change from the prior quarter.

The consensus estimate for fee-related performance revenues (segment revenues) of $480 million suggests a significant rise sequentially.

Blackstone’s expenses have been elevated over the past few years mainly because of higher general, administrative and other expenses. As the company has been continuing to make investments in franchise, expenses are expected to have risen to some extent in the fourth quarter as well.

Here is what our quantitative model predicts:

According to our quantitative model, the chances of Blackstone beating the Zacks Consensus Estimate this time are high. That is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Blackstone is +3.76%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks That Warrant a Look

A couple of other finance stocks, which you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases per our model, are Franklin Resources BEN and Ares Capital Corporation ARCC.

The Earnings ESP for Franklin is +0.11% and it carries a Zacks Rank of 3 at present. BEN is scheduled to report quarterly numbers on Feb 1.

Ares Capital is slated to report quarterly results on Feb 9. ARCC currently has an Earnings ESP of +11.11% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Blackstone Inc. (BX) : Free Stock Analysis Report

Franklin Resources, Inc. (BEN) : Free Stock Analysis Report

Ares Capital Corporation (ARCC) : Free Stock Analysis Report

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