The Truth behind Blackstone's Record 1Q17 Numbers

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Part 7
The Truth behind Blackstone's Record 1Q17 Numbers PART 7 OF 8

How Is Blackstone’s Valuation Looking after 1Q17?

Blackstone’s valuations

Blackstone Group’s (BX) registered growth and strength across its divisions, with particularly high deployments and realizations in its Private Equity and Real Estate divisions. The company posted an economic net income of $986 million in 1Q17, showing strength sequentially as well as YoY (year-over-year). Its distributable earnings stood at $1.2 billion, or $1.02 per share, representing a rise of 212% from 1Q16.

How Is Blackstone&#8217;s Valuation Looking after 1Q17?

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Blackstone stock has relatively outperformed over the past six months, and its performance has shown improvement over the past few quarters as well. Blackstone’s valuation now stands at 9.5x on a one-year forward earnings basis, while its peers are trading at an average of 7.9x. BX’s premium has widened in recent months on relative outperformance, beating estimates, and diversified earnings.

Notably, alternative asset managers have been trading at discounts compared to traditional managers like State Street (STT), Bank of New York Mellon (BK), and BlackRock (BLK).

Deployments and realizations

Blackstone’s deployments across divisions have provided it with diversified earnings, and the company continues to target new growth avenues for deployments and raising funds. In 1Q17, Blackstone raised $14 billion across segments and deployed $11.7 billion, resulting in dry powder of $94.3 billion as of March 31, 2017.

Notably, the company’s dry powder has grown 6% on a year-over-year basis, reflecting higher capital placement.

In 2Q17, BX is expected to see an economic net income of $0.68, which would be marginally lower than in 1Q17, mainly due to subdued equity market growth and high valuations.

Alternative managers form part of the iShares Dow Jones US Financial ETF (IYF).


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