What's in the Cards for BlackRock (BLK) in Q1 Earnings?
BlackRock, Inc. BLK is slated to report first-quarter 2021 results on Apr 15, before the opening bell. Its revenues and earnings in the to-be-reported quarter are expected to have improved on a year-over-year basis.
In fourth-quarter 2020, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues, partly offset by higher expenses. Further, long-term net inflows resulted in a rise in assets under management (AUM) balance, which was a major positive for the company.
BlackRock has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three and lagged in one of the trailing four quarters, with a surprise of 10.4%, on average.
BlackRock, Inc. Price and EPS Surprise
BlackRock, Inc. price-eps-surprise | BlackRock, Inc. Quote
However, the company’s business activities and prospects in the first quarter did not encourage analysts to revise earnings estimates upward. Thus, the Zacks Consensus Estimate for its first-quarter earnings of $8.02 has been revised 2.9% lower over the past seven days. Nevertheless, the figure indicates a rise of 21.5% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $4.30 billion, which suggests an increase of 15.8% from the prior-year quarter’s reported number.
Now, before we take a look at what our quantitative model predicts for the to-be-reported quarter, let’s discuss the factors that are likely to have impacted the company’s quarterly performance.
Key Factors & Estimates for Q1
BlackRock has been a dominant player in the exchange traded fund (ETF) market, given its continued investments in the U.S. iShare core ETFs. Moreover, with investors increasing allocations toward ETFs instead of alternative investments to reduce management costs, the company’s iShares inflows have been strong over the past several quarters.
Moreover, despite continued concerns related to the pandemic, the first quarter witnessed decent asset inflows. Thus, supported by inflows, BlackRock’s AUM is expected to have improved in the quarter.
The Zacks Consensus Estimate for AUM for the first quarter is pegged at $8.92 trillion, indicating a rise of 2.8% from the previous quarter’s reported number.
Notably, driven by an expected increase in AUM, the related fee is also expected to have been positively impacted.
The consensus estimate for total investment advisory, administration fees and securities-lending revenues for the to-be-reported quarter is pegged at $3.57 billion, suggesting a sequential increase of 5.3%.
The consensus estimate for distribution fee of $321 million indicates a rise of 2.2% from the previous quarter’s reported figure. The consensus estimate for technology services revenues is pegged at $306 million, which suggests a marginal rise from the previous quarter’s reported number.
However, the consensus estimate for investment advisory performance fees of $77 million indicates a decline of 81.6% from the previous quarter’s reported number.
BlackRock’s expenses have been elevated over the past few years. As the company has been continuing with its restructuring initiatives to modify the size and shape of its workforce, and improve operating efficiency, overall costs are expected to have increased in the to-be-reported quarter as well.
Earnings Whispers
According to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — which is required to be confident of an earnings surprise call.
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 BlackRock is -3.68%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some finance stocks that 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.
The Earnings ESP for Wells Fargo WFC is +5.32% and it carries a Zacks Rank of 3 at present. The company is scheduled to report quarterly numbers on Apr 14.
Citigroup C is slated to report quarterly results on Apr 15. The company has an Earnings ESP of +4.48% and it currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bank of America BAC is slated to report quarterly earnings on Apr 15. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.49%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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
Citigroup Inc. (C) : Free Stock Analysis Report
Wells Fargo & Company (WFC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
