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BlackRock Misses 1Q16 Estimates on Declining Global Equities

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BlackRock misses estimates

BlackRock (BLK), the world’s largest asset manager, reported its 1Q16 earnings on April 14, 2016. The company missed Wall Street analysts’ adjusted EPS (earnings per share) estimates of $4.29, posting EPS of $4.25.

BlackRock reported net income of $657 million in 1Q16, a decline of 20% from $822 million in the prior year’s quarter. Reported revenues were $2.6 billion, a decline of 4% compared to the prior year’s quarter. The company’s total assets under management increased to $4.7 trillion compared to $4.6 trillion in the prior year’s quarter.

The decline in global equities in the beginning of 2016 caused a dent in the company’s net combined with increased cost pressure on ETFs. The stock rose by 1% on the announcement of the results.

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Management comments

In a company press release on April 14, 2016, BlackRock chairman and chief executive officer Laurence D. Fink said, “BlackRock performed well in a challenging market environment and our first quarter 2016 results demonstrate our ongoing ability to help clients achieve their investment goals.” Fink went on to say, “BlackRock generated long-term net inflows of $36 billion in the quarter, driven by positive global flows across both active and index products. Over the last twelve months, we saw $118 billion of long-term net inflows, muting the impact of $148 billion of market and FX headwinds over the same period.”

BlackRock posted revenues of $11.4 billion in the last fiscal year. Let’s compare that to revenues for BlackRock’s peers:

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

Together, these companies form 1.7% of the SPDR S&P 500 ETF (SPY).

BlackRock overview

BlackRock has become the world’s largest asset manager in just two decades. The company is managing $4.7 trillion in assets for governments, sovereign wealth funds, institutions, and retail clientele. It manages assets through various product offerings such as portfolio investing equities, fixed income, alternatives, and money market instruments across global markets and asset classes.

In this series, we’ll be looking at BlackRock’s fund flows, ETFs, pricing pressures, dividends, strategic initiatives, outlook, and valuations.

First, let’s see why BlackRock iShares continues to be a mainstay among its competition.

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