The Blackstone Group L.P. BX remains well positioned for growth given its revenue mix, inorganic growth efforts and continued asset inflows. Moreover, the company's decision to convert itself from a publicly traded partnership to a corporation will likely help attract more investors for its stock.
The Zacks Consensus Estimate for its current-year earnings has been marginally revised upward over the past 30 days, reflecting that analysts are optimistic regarding Blackstone’s earnings growth prospects.
Moreover, shares of the company have gained 60.2% in the past six months, outpacing 18.9% growth recorded by the industry it belongs to.
However, persistently mounting costs are likely to hurt Blackstone’s bottom-line growth. In addition, sustainability of the company's capital deployment actions is low. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Looking at its fundamentals, revenues (GAAP basis) have witnessed a four-year (2015-2018) CAGR of 13.7%. This uptrend is expected to continue in the upcoming quarters, backed by better performance of its funds.
Furthermore, Blackstone’s fee-earning assets under management (AUM) as well as total AUM consistently demonstrate strong growth. Over the last four years (2015-2018), fee-earning AUM witnessed a CAGR of 11.6%, while total AUM recorded a CAGR of 12%. These were driven by increasing net inflows. In fact, given the company’s diversified products, revenue mix and superior position in the alternative investments space, growth in AUM is anticipated to continue.
However, elevated expenses are a concern for Blackstone. Costs have escalated at a four-year (2015-2018) CAGR of 4.4%. This upswing mainly stemmed from higher general, administrative and other expenses. Expenses are expected to continue rising as the company’s well-performing funds require more headcount and because of its continued investment in franchise.
Additionally, the company’s increased dependence on management and advisory fees for revenues may affect its financials, if it witnesses any change in the managed assets, regulations or a slowdown in business activities.
Some better-ranked stocks from the finance space are Hilltop Holdings Inc. HTH, Cadence Bancorporation CADE and First Bancorp FBNC. Each of these currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past 60 days, Hilltop Holdings witnessed an upward earnings estimate revision of 11.5% for the current year. Its share price has increased 17.2% in the past six months.
Cadence Bancorporation’s Zacks Consensus Estimate for 2019 has been revised 8.8% upward over the past 60 days. Its shares have gained nearly 13.7% in the past six months.
Over the past 60 days, First Bancorp witnessed an upward earnings estimate revision of 3% for the ongoing year. Its share price has rallied 12.7% in the past six months.
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