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Can BlackRock Keep Outperforming on Diversified Offerings?

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Can BlackRock Keep Outperforming on Diversified Offerings? PART 1 OF 8

Why BlackRock’s Diversified Product Line Matters

2Q17 earnings

BlackRock (BLK), the world’s largest asset manager, has seen rising and sustained income levels over the past few years, mainly due to diversified and innovative product offerings like iShares. The asset management giant is expected to post EPS (earnings per share) of $5.31 in 2Q17—a growth of 11.09% on a YoY (year-over-year) basis.

For fiscal 2017, BLK is expected to post EPS of $21.7, which represents a growth of 12.4% and implies a PE (price-to-earning) ratio of 17.3x. In 1Q17, BlackRock beat estimates of $4.89 and posted EPS of $5.23.

Why BlackRock&#8217;s Diversified Product Line Matters

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BlackRock has attracted flows to ETFs across equity and debt offerings. In 1Q17, the company attracted $75 billion in net flows, led by flows in its iShares and institutional offerings. The asset management giant foresees more flows toward Treasury-backed ETFs, now that the Fed has raised rates for the second time in 2017. The company posted adjusted net income of $865 million in 1Q17, which represents a growth of 22% from $711 million in 1Q16.

BlackRock’s revenue climbed to ~$2.8 billion, but it missed estimates mainly due to lower advisory and distribution fees. On March 31, 2017, the company was managing total assets of ~$5.4 trillion, as compared to ~$4.7 trillion one year previously and ~$5.1 billion in the previous quarter. Notably, State Street (STT) and J.P. Morgan (JPM) have also demonstrated improved performances on rising broad markets (SPX-INDEX) (SPY).

An ETF giant

On March 31, 2017, BlackRock had AUM (assets under management) of $5.4 trillion—the highest among global asset managers—raised from governments, corporates, institutions, sovereign wealth funds, and retail clientele.

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

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