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Why is Earnings Beat Less Likely for Blackstone (BX) in Q1?

Zacks Equity Research

Blackstone BX is scheduled to report first-quarter 2019 results on Apr 18, before the opening bell. While its revenues for the to-be-reported quarter are projected to grow year over year, earnings are expected to witness a decline.

In the last reported quarter, the company’s results were adversely impacted by a decline in revenues. However, growth in assets under management (AUM) and lower expenses were tailwinds.

Blackstone has a decent earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters.

The Blackstone Group L.P. Price and Consensus
 

The Blackstone Group L.P. Price and Consensus | The Blackstone Group L.P. Quote

However, activities of the company in the first quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 51 cents has moved 13.6% lower over the past 30 days. The figure reflects a year-over-year decline of 21.5%.

The consensus estimate for sales of $1.93 billion indicates improvement of 15.8% from the year-ago quarter.

Factors to Influence Q1 Results

Driven by net inflows, Blackstone’s fee-earning AUM and total AUM have been witnessing consistent growth since the past few years. The same trend is likely to have continued in the to-be-reported quarter despite an overall challenging operating backdrop.

The Zacks Consensus Estimate for fee-earning AUM for the first quarter is pegged at $348 billion, which reflects improvement of 1% year over year. Also, the consensus estimate for total AUM of $497 billion depicts 10.4% growth from the prior-year quarter.

Net management and advisory fees (segment revenues) are projected to be $761 million, up 3.4% from the year-ago quarter.

On the cost front, Blackstone’s expenses have remained elevated over the past few years mainly because of higher general, administrative and other expenses. As the company continues making investments in franchise, total expenses are expected to remain elevated in the first quarter.

Here is what our quantitative model predicts:

According to our quantitative model, chances of Blackstone beating the Zacks Consensus Estimate in the first quarter are low. That is because it does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.

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 -3.70%.

Zacks Rank: Blackstone currently has a Zacks Rank #4 (Sell).

Stocks That Warrant 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 this quarter, per our model.

BankUnited, Inc. BKU has an Earnings ESP of +1.89% and carries a Zacks Rank of 3 at present. The company is slated to release results on Apr 24.

Associated Banc-Corp ASB is expected to release results on Apr 25. It presently has an Earnings ESP of +0.55% and a Zacks Rank #3.

SVB Financial Group SIVB is slated to release results on Apr 25. It has an Earnings ESP of +0.42% and currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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BankUnited, Inc. (BKU) : Free Stock Analysis Report
 
Associated Banc-Corp (ASB) : Free Stock Analysis Report
 
SVB Financial Group (SIVB) : Free Stock Analysis Report
 
The Blackstone Group L.P. (BX) : Free Stock Analysis Report
 
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