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BlackRock: Strategic Initiatives amid Slowing Alpha Returns

PART:
1 2 3 4 5 6 7 8 9 10
Part 9
BlackRock: Strategic Initiatives amid Slowing Alpha Returns PART 9 OF 10

Earnings Growth: How BlackRock Compares to Other Managers

2017 expected performance

Asset managers (XLF) are expected to see marginal or no growth in 3Q17 and 2H17. This outlook is mainly due to lower expected returns from markets that could translate into lower performance income, which could be partially offset by improved performance from fixed-income offerings and higher fund flows.

BlackRock (BLK) is expected to post earnings per share (or EPS) of $5.47 in 3Q17 and $5.82 in 4Q17, compared to $5.14 in the previous year’s quarters. This growth could be fueled by higher flows in ETFs, index funds, contributions from institutional investors in alternative offerings, and stable market returns. The company is expected to see top-line growth of 8.7% to $3.08 billion in 3Q17.

Earnings Growth: How BlackRock Compares to Other Managers

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BNY Mellon

On the other hand, Bank of NewYork Mellon (BK) is expected to see EPS of $0.92 in 3Q17 and $0.91 in 4Q17, reflecting rises of 2% and 18%, respectively, year-over-year. This growth reflects subdued expectations and a sequential rise, mainly due to higher core banking revenues and partially offset by lower performance income in the asset management business.

The bank is expected to see a top line of $4 billion in 3Q17, a rise of 1.8% year-over-year, reflecting subdued growth on lower non-interest income.

T. Rowe and State Street

T. Rowe (TROW) is expected to see a sequential decline in its earnings on lower inflows, a performance income decline, and subdued equity markets. The asset manager is expected to post EPS of $1.37 and $1.35 in 3Q17 and 4Q17, respectively.

The company’s revenue is expected to expand at rates of 9.8% and 10.9%, respectively, in 3Q17 and 4Q17. State Street (STT) is expected to post EPS of $1.60 and $1.70 in 3Q17 and 4Q17, respectively. The company is expected to post revenue growth of 6.2% to $2.92 billion, driven by new fund flows toward ETFs offerings.

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