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BlackRock (BLK) Lags on Q2 Earnings as Revenues Decline

Zacks Equity Research

BlackRock, Inc.’s BLK second-quarter 2019 adjusted earnings of $6.41 per share lagged the Zacks Consensus Estimate of $6.52. Moreover, the figure was 3.8% lower than the year-ago quarter’s number.

Results were hurt by a decline in revenues along with higher expenses. However, growth in assets under management (AUM) supported results to some extent.

Net income attributable to BlackRock (on a GAAP basis) was $1 billion, decreasing 6.5% from the prior-year quarter.

Revenues Decline, Expenses Rise

Revenues for the reported quarter (on a GAAP basis) were $3.52 billion, declining 2.2% year over year. This downside stemmed from a decrease in almost all components of revenues except for technology services revenues. Moreover, the reported figure missed the Zacks Consensus Estimate of $3.55 billion.

Total expenses amounted to $2.25 billion, up nearly 3.7% year over year. This increase was due to rise in almost all components except for direct fund expenses.

Non-operating income (on a GAAP basis) was $57 million versus non-operating expenses of $24 million recorded in the year-ago quarter.

BlackRock’s adjusted operating income was $1.28 billion, down 11.4% year over year.

Net Inflows Support AUM Growth

As of Jun 30, 2019, AUM totaled nearly $6.8 trillion, reflecting rise of 8.6% year over year. Furthermore, during the reported quarter, the company witnessed long-term net inflows of $125.37 billion.

Our Viewpoint

BlackRock’s acquisitions and expansion efforts, along with initiatives to restructure its actively managed equity business, are expected to boost the top line and AUM. Moreover, its capital deployment actions reflect strong balance sheet position. However, continued increase in operating expenses (as witnessed in the second quarter) and the company's high dependence on overseas revenues remain matters of concern.

BlackRock, Inc. Price, Consensus and EPS Surprise

BlackRock, Inc. Price, Consensus and EPS Surprise

BlackRock, Inc. price-consensus-eps-surprise-chart | BlackRock, Inc. Quote

BlackRock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Schedule of Other Investment Managers

Ameriprise Financial, Inc. AMP is scheduled to report results on Jul 24. Federated Investors, Inc. FII and Ares Capital Corporation ARCC are scheduled to announce quarterly numbers on Jul 25 and Jul 30, respectively.

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