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BlackRock Manages Strong Growth in 1Q17 on New Flows, ETFs

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BlackRock Manages Strong Growth in 1Q17 on New Flows, ETFs PART 1 OF 8

BlackRock Bests Estimates on Earnings, Misses on Revenue in 1Q17

Record earnings

BlackRock (BLK), the world’s largest asset manager, reported its 1Q17 earnings on April 19, 2017. The company beat Wall Street analysts’ adjusted EPS (earnings per share) estimate of $4.89, posting EPS of $5.23, a sequential rise of 1.8%.

BlackRock Bests Estimates on Earnings, Misses on Revenue in 1Q17

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BlackRock reported adjusted net income of $865 million in 1Q17, a rise of 22% from $711 million in 1Q16. Its revenue rose 8% YoY (year-over-year) to ~$2.8 billion, but it missed estimates mostly due to lower advisory and distribution fees. The company’s total assets under management rose to ~$5.4 trillion, compared to ~$4.7 trillion in 1Q16 and ~$5.1 billion in the previous quarter.

BlackRock attracted $75 billion in net flows led by flows in its iShares and institutional offerings. Investors have continued to divert funds toward low-cost ETFs in efforts to take advantage of improved broad markets (SPX-INDEX) (SPY).

BlackRock posted revenue of $11.2 billion in 2016. Its peers posted the following numbers:

  • Bank of New York Mellon (BK): $3.2 billion
  • State Street (STT): $2.7 billion
  • JPMorgan Chase (JPM): $51 billion

BlackRock’s chair and CEO, Laurence D. Fink, commented on the results, saying, “BlackRock’s first quarter results reflect the strategic decisions we have made to complement our investment capabilities with industry-leading technology. Over the last 29 years, we’ve kept our focus on the long-term, anticipating changes in the asset management ecosystem and consistently investing in our business, to meet the evolving needs of our clients.”

ETF giant

As of March 31, 2017, BlackRock is managing nearly $5.4 trillion in assets for institutions, sovereign wealth funds, governments, corporates, and retail clientele. 

In this series, we’ll study BlackRock’s performance, flows, iShares, strategic initiatives, dividends, outlook, competition, and valuations.

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