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BlackRock (BLK) Poised to Beat Q1 Earnings: Here's Why

We expect BlackRock, Inc. BLK to beat expectations when it reports first-quarter 2016 results on Apr 14, before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that BlackRock is likely to beat earnings as it has the right combination of two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold) to have a significantly higher chance of beating earnings.

Zacks ESP: The Earnings ESP for BlackRock is +0.23%. This is because the Most Accurate estimate of $4.30 is above the Zacks Consensus Estimate of $4.29.

Zacks Rank: BlackRock’s Zacks Rank #2 increases the predictive power of ESP. The combination of the company’s Zacks Rank #2 and a positive ESP makes us confident of an earnings beat.

Factors to Drive Q1 Results
 
Slower economic growth is bound to dampen the performance of the entire asset management industry. However, BlackRock is well positioned to combat the macroeconomic issues through new product offerings and client assets.

The company’s diversified footprint and strong product mix will continue to boost organic growth. Further, the company’s commitment to grow revenues through investments will likely be reflected in the form of improved revenue generation in this quarter.

Moreover, the company anticipates continued business momentum in Aladdin, driven by trends favoring global investment platform consolidation and multi asset risk solutions, to boost revenues.

In addition, BlackRock continues to dominate the ETF market. The company’s brand initiatives for the iShares and ETF business will boost top-line growth.

Moreover, BlackRock remains focused on investing in technology and new product offerings. The company’s efforts to grow its iShares and Retail offerings will help it scale up its assets under management (AUM) and boost margins.

On the other hand, BlackRock’s profitability remains challenged by a persistent rise in operating expenses. The pressure is expected to continue in the current quarter with management predicting a higher level of G&A expenses due to transaction-related expenses associated with the recent acquisitions.

BlackRock’s activities during the quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate decreased 1% to $4.29 per share over the last 7 days.

Stocks That Warrant a Look

BlackRock is not the only firm looking up this earnings season. We also anticipate earnings beat from the following finance companies:

PrivateBancorp, Inc. PVTB has an Earnings ESP of +1.75% and a Zacks Rank #3. It is scheduled to report results on Apr 21.

The Blackstone Group L.P. BX has an Earnings ESP of +31.25% and a Zacks Rank #3. It is slated to report earnings on Apr 21.

People's United Financial Inc. PBCT has an Earnings ESP of +4.76% and a Zacks Rank #3. It is also slated to report results on Apr 21.

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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
 
PRIVATEBANCORP (PVTB): Free Stock Analysis Report
 
BLACKSTONE GRP (BX): Free Stock Analysis Report
 
BLACKROCK INC (BLK): Free Stock Analysis Report
 
PEOPLES UTD FIN (PBCT): Free Stock Analysis Report
 
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