|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||27.48 - 28.17|
|52 Week Range||22.97 - 30.33|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.14%|
Stocks getting smoked as the yields keep rising and tech tumbles.
In 1Q18, The Blackstone Group’s (BX) credit division’s total revenue fell 11% YoY (year-over-year) to $202.1 million from $226.3 million. Its performing credit delivered 3.2% in composite gross returns, while its distressed strategies delivered -0.3%.
In 1Q18, The Blackstone Group’s (BX) corporate private equity division grew 6.4% thanks to its private portfolio. It deployed $4 billion toward Paysafe, Strategic Partners, and Tactical Opportunities. The division’s total revenue rose 9% YoY (year-over-year) to $681.1 million, and its net management and advisory fees rose 6% YoY from $180.6 million to $190.8 million.
The Blackstone Group (BX) posted strong 1Q18 results on April 19. The company reported EPS (earnings per share) of $0.65, exceeding analysts’ expectation by $0.15, but lower than its 4Q17 EPS. It generated net economic income of $792 million, marking a YoY (year-over-year) decline. Alternative asset managers (XLF) such as Carlyle (CG), KKR (KKR) and Apollo Global Management (APO) are impacted by having a high valuation, which decreases their chances of making deployments.
B. Riley FBR chief market strategist Art Hogan believes strong market and economic fundamentals will prevail over rising rates and geopolitical risks.
From both an economic and regulatory perspective, banks should be doing great right now, but even with solid fundamentals, the Financial Select Sector SPDR ETF (XLF) is still slightly in the red for the year. Keefe, Bruyette & Woods' Frederick Cannon argues that the Goldilocks environment itself might actually be the problem. Cannon writes that at first blush, this sounds like a good setup for financial stocks.
The six big US banks (XLF) (VFH)—JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC), Goldman Sachs (GS), Morgan Stanley (MS), and Bank of America (BAC)—posted record profits in 1Q18 due to tax savings under the new tax law. According to an Associated Press estimate, the six banks saved at least $3.59 billion last quarter due to the new tax law.
The energy sector (XLE) rose 2.6% last week because of the continued surge in oil prices, which will likely remain in focus given that President Trump started tweeting about OPEC and crude prices. The industrial and consumer discretionary sectors rose 2.1% and 1.7%, respectively, while the financial (XLF) sector rebounded by 1.6% due to the increase in bond yields. Large speculators of the S&P 500 Index, which include hedge funds, increased net bullish positions last week.
Many risks that pushed stock market volatility higher in the last few weeks have started to retreat, which helped equity market indexes last week. President Trump paused further sanctions on Russia, and Trump’s planned meeting with Kim Jong Un after the latter said North Korea would end nuclear tests pushed a major geopolitical risk off the table for now. The risk of a flattening yield curve has also reversed as the US ten-year yield breached the February high on the back of renewed inflation expectations.
State Street Corporation (STT) beat analysts’ expectations for earnings per share or EPS as well as revenues for 1Q18. The company reported EPS of $1.62, beating analysts’ projections by $0.04. The EPS reflect a substantial rise of 41% on a YoY basis. Management reflected favorable views for the 1Q18 results and stated that they were helped by favorable momentum in net interest income as well as fee revenues.
Charles Schwab (SCHW) generated total net revenues amounting to $2.39 billion in 1Q18 compared to $2.08 billion in 1Q17. However, in 4Q17, total net revenues were $2.24 billion. The company’s asset management and administration fees amounted to $851 million in 1Q18, a rise of 3% year-over-year thanks to the increased balances in equity and bond funds as well as advised solutions. However, ETFs also saw higher balances, which also contributed to the higher total net revenues in 1Q18.
Charles Schwab (SCHW) has a price-to-earnings ratio of 20.80x on an NTM (next-12-month) basis, which implies a premium valuation, as the average for competitors is 11.30x. Morgan Stanley (MS), Wells Fargo (WFC), and Raymond James Financial (RJF) have price-to-earnings ratios of 11.26x, 10.55x, and 12.10x, respectively, on an NTM basis.
Charles Schwab’s (SCHW) total expenses excluding interest amounted to $1.4 billion in 1Q18, which implies a rise sequentially and YoY (year-over-year). Charles Schwab’s compensation and benefits expenses amounted to $770 million in 1Q18 compared to $711 million in 4Q17, which implies an 8% increase. Charles Schwab incurred professional services expenses amounting to $156 million in 1Q18, while in 1Q17, it incurred $133 million, a rise of 17%.
Charles Schwab (SCHW) ended 1Q18 with total client assets amounting to $3.3 trillion, a fall compared to 4Q17 but a rise on a year-over-year basis. In 1Q18, the company posted total proprietary mutual funds amounting to $228.4 billion, while in 4Q17, the figure stood at $246.1 billion. This decline was mainly because of a fall in money market funds from $163.6 billion in 4Q17 to $145 billion in 1Q18.
Charles Schwab (SCHW) posted earnings per share (or EPS) of $0.55 in 1Q18, which exceeded expectations by $0.02. Brokerages (XLF) have benefitted from market volatility, as it prompts customers to increase trading activity.
What Lies Ahead for Prudential Financial? Of the 18 analysts covering Prudential Financial (PRU) in April 2018, six have recommended “strong buy,” five have recommended “buy,” and seven have recommended “hold.” There were no “strong sell” or “sell” recommendations.
Prudential Financial’s (PRU) 4Q17 results were boosted by the Tax Cuts and Jobs Act. During the quarter, it had EPS (earnings per share) of $2.69, while peers (XLF) MetLife (MET), American International Group (AIG), and The Hartford (HIG) had EPS of $0.64, $0.57, and $0.81, respectively.
Morgan Stanley (MS) stock has fallen 4.6% over the past three months and risen 28.7% over the past year. In comparison, the overall sector (XLF) has fallen 6.4% and risen 19.1%, respectively. The bank’s asset management offerings, interest income, and consistent trading revenue have continued to support its strong performance.
Prudential Financial’s (PRU) asset management business is overseen by PGIM. According to the company, its asset management business has a strong revenue base. The company generates asset management fees from different asset classes. In 2017, 45% of the company’s asset management fees were from public fixed income, 8% were from private fixed income and equity, 17% were from real estate assets, 25% were from public equity, and 5% were from commercial mortgages.
Wall Street analysts were upbeat about investment bankers (XLF) in 1Q18 due to an expected spike in trading. Major banks managed to beat estimates and the overall forecast for 2Q18 is lower.
Morgan Stanley’s (MS) total assets under management rose 8% YoY (year-over-year) to $2.4 trillion on March 31, 2018, helped by a higher valuation of holdings and flow. Quarter-over-quarter, its total assets under management were flat, reflecting lower valuation increases and offset by new, long-term flow.