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Blackstone (BX) Q2 Earnings Miss Estimates, Stock Falls 2%

Shares of The Blackstone Group L.P. BX lost nearly 2% in pre-market trading, following the release of the company’s second-quarter 2017 earnings. Economic net income (ENI) of 59 cents per share lagged the Zacks Consensus Estimate of 62 cents. However, the figure compared favorably with 44 cents recorded in the prior-year quarter.

An increase in expenses was the primary reason for the lower-than-expected results. However, the quarter witnessed a rise in revenues. Also, growth in assets under management (AUM) continued to impress.

For the quarter, Blackstone reported ENI of $705.4 million, reflecting an increase 36% year over year.

Revenues & Costs Rise

Total revenue (GAAP basis) increased 30% year over year to $1.55 billion, primarily driven by a rise in performance fees as well as interest and dividend revenues. Also, the top line handily surpassed the Zacks Consensus Estimate of $1.49 billion.

Total expenses (GAAP basis) increased 24% year over year to $885.1 million. The increase was primarily due to a drastic increase in fund expenses.

Fee-earning AUM grew 6% year over year to $281.9 billion. Total AUM amounted to $371.1 billion as of Jun 30, 2017, up 4% year over year. The rise in total AUM was largely driven by $57.4 billion of inflows.

As of Jun 30, 2017, Blackstone had $5 billion in total cash, cash equivalents and corporate treasury investments.

Our Viewpoint

Blackstone remains well positioned to capitalize on the changing investment landscape by making long-term investments and augmenting its fund-raising abilities. However, increased dependence on management and advisory fees can affect the company’s financials in the near term.

The Blackstone Group L.P. Price, Consensus and EPS Surprise
 

The Blackstone Group L.P. Price, Consensus and EPS Surprise | The Blackstone Group L.P. Quote

Currently, Blackstone carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Investment Managers

BlackRock, Inc. BLK reported second-quarter 2017 adjusted earnings of $5.24 per share, which lagged the Zacks Consensus Estimate of $5.39. Lower-than-expected results were primarily due to a rise in operating expenses and lower investment advisory performance fees. However, increase in investment advisory, administration fees and securities lending revenues, along with growth in assets under management (AUM) acted as tailwinds.

Among other investment managers, Ameriprise Financial, Inc. AMP is slated to report results on Jul 25 and Waddell & Reed Financial, Inc. WDR is slated to come up with its financial numbers on Aug 1.

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Waddell & Reed Financial, Inc. (WDR): Free Stock Analysis Report
 
AMERIPRISE FINANCIAL SERVICES, INC. (AMP): Free Stock Analysis Report
 
The Blackstone Group L.P. (BX): Free Stock Analysis Report
 
BlackRock, Inc. (BLK): Free Stock Analysis Report
 
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