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BlackRock's Earnings, Revenue Surpass Projections as AUM Surge to Record High

GuruFocus.com
·3 min read

- By Sydnee Gatewood

Increased activity in financial markets caused the world's largest asset manager, BlackRock Inc. (NYSE:BLK), to report better-than-expected fourth-quarter and full-year 2020 results before the opening bell on Jan. 14.

As investors piled into BlackRock's exchange-traded funds and promising actively managed funds on the back of escalating volatility related to the U.S. presidential election and the release of several Covid-19 vaccines, the firm was able to rake in higher investment and advisory fees.


The New York-based investment management company posted adjusted earnings of $10.18 per share for the quarter ended Dec. 31, topping Refinitiv's estimates of $9.14. Revenue grew 13% from the prior-year quarter to $4.48 billion, beating expectations of $4.27 billion.

For the full year, it recorded earnings of $33.82 per share on $16.2 billion in revenue.

BlackRock's Earnings, Revenue Surpass Projections as AUM Surge to Record High
BlackRock's Earnings, Revenue Surpass Projections as AUM Surge to Record High

Assets under management, an important metric, swelled from $7.43 trillion a year ago to a record $8.68 trillion. In contrast, total net inflows for the quarter were $126.93 billion, down slightly from $128.84 billion reported last year.

In a statement, Chairman and CEO Larry Fink commented on BlackRock's strong performance despite the "unprecedented challenges" faced in 2020.

"Through it all, BlackRock remained steadfast in meeting the needs of all our stakeholders," he said. "We stayed true to our purpose and used our voice and values to advocate on behalf of the institutions and individuals we help to meet their investment and savings goals, and to be a positive force in the communities where we operate."

Heading into the new year, Fink also noted the company is "well-positioned" and plans to keep investing in its business to drive long-term growth as well as be a leader in revolutionizing the asset management industry.

"In doing so, we remain committed to help millions of people build savings throughout their lives, make investing easier and more affordable, advance sustainable investing, and contribute to a more resilient economy that benefits more people," he said.

As for his outlook on the stock market as a whole, the BlackRock CEO told CNBC's "Squawk Box" on Thursday he believes there is still room to run but cautioned that the rally may not be as robust as it was in the second half of 2020.

"I think we're going to continue to see the market to be strong into 2021, probably not as strong as we saw in the fourth quarter or the third quarter last year," Fink said.

The S&P 500 gained more than 20% between July 1 and Dec. 31 as equities began to recover from the massive pandemic-induced selloff seen in February and March.

BlackRock's Earnings, Revenue Surpass Projections as AUM Surge to Record High
BlackRock's Earnings, Revenue Surpass Projections as AUM Surge to Record High

As the broad rollout of Covid-19 vaccines will lead to a resumption of more economic activity, however, he anticipates the second half of the year will be even stronger.

"I believe by June, July in many parts of the developed world, we have the possibility of herd immunity," Fink said. "And when we have herd immunity through vaccinations, we are going to see the industries that are still struggling, the industries around the aggregation and congregation of human beings, such as culture, such as business conferences, sporting events and, importantly, restaurants and travel, that is when you are going to start seeing, most certainly by the fourth quarter but maybe in the third quarter, a real extended economic rally in terms of the overall economy."

Despite the strong performance, shares of BlackRock were down 3.17% on Thursday morning at $755. GuruFocus estimates the stock climbed over 40% in 2020.

BlackRock's Earnings, Revenue Surpass Projections as AUM Surge to Record High
BlackRock's Earnings, Revenue Surpass Projections as AUM Surge to Record High

Disclosure: No positons.

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This article first appeared on GuruFocus.