Can BlackRock Continue Its Momentum into 2018?
BlackRock (BLK), the world’s largest asset manager, has managed to beat estimates in four of the past five quarters, reflecting rising broad markets (SPY) (SPX-INDEX) and consistent flows. The company has managed to attract new funds across asset classes. In 4Q17, BlackRock is expected to post EPS (earnings per share) of $5.94. That reflects higher flows into ETFs, a rise in the valuation of its holdings, diversified offerings, and artificial intelligence–backed technology attracting new funds.
Interested in BLK? Don't miss the next report.
Receive e-mail alerts for new research on BLK
Flows across categories
In 3Q17, BlackRock beat EPS estimates of $5.56 and posted EPS of $5.92. The company saw inflows in retail, institutional, and all three categories of ETFs, which helped with higher base fees. The rising markets helped in improved performance fees. It’s managing $6 trillion as of September 30, 2017, helped by $96 billion in new flows for 3Q17. The number could easily rise beyond $6 trillion in 4Q17, reflecting stellar performance amid substantially higher assets under management.
Competitors in ETFs
Other major asset managers, including Vanguard and State Street (STT), have managed new flows into ETFs. JPMorgan Chase (JPM) has also expanded its ETF offerings to command more assets flowing into indexes or ETFs. BlackRock’s revenues rose 14% to $3.2 billion in 3Q17, and its operating income expanded 15%, reflecting economies of scale and expense management.
BlackRock added $52 billion through ETF offerings, reflecting strong investor preference for low-cost, theme-based offerings.
In this series, we’ll look at BlackRock’s expected performance in 4Q17 and 2018, fund flows, iShares offerings, strategic initiatives, outlook, competition, dividends and repurchases, and valuations.