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Can Blackstone Continue to Beat Estimates?

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Aug. 18 2016, Updated 8:39 a.m. ET

Blackstone beats the estimates

The Blackstone Group (BX) is expected to post earnings per share (or EPS) of $0.65 in the September quarter and $2.08 for the full year, translating into a price to earnings of 13.4x and a one-year forward price to earnings of 9.9x. The company’s performance is expected to improve on recovery in broad markets, a rise in valuations of holdings, and a stable real estate market. The company posted economic net income of $0.44 in the March quarter, beating Wall Street analysts’ economic net income estimates of $0.39.

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Blackstone is the world’s biggest alternative asset manager. The company has underperformed its peers in the recent quarters due to a weak performance of its private equity holdings, partially offset by its real estate performance. The alternative asset manager giant has deployed a record amount of capital over the past six months in order to take advantage of cheap valuations.

Blackstone reported an economic net income of $520 million in the second quarter, mainly due to higher investment income, dividend, and base fees, partially offset by lower performance fees in comparison to the prior-year quarter. Its assets under management rose by 7% on a year-over-year basis to $356 billion. The company invested $4 billion in new opportunities.

Blackstone’s revenue fell 40% in the last fiscal year. The revenue growth for Carlyle (CG), KKR (KKR), and Apollo Global Management (APO) fell 7.2%, 18.3%, and 59.6%, respectively.

Biggest alternative investor

Blackstone provides financial advisory services to clients around the world. The company’s alternative asset management includes investment vehicles focused on private equity, real estate, hedge fund solutions, funds of funds, non-investment-grade credit, and multi-asset class exposures outside other funds’ mandates.

Blackstone also provides financial advisory services, including financial and strategic advisory services, restructuring and reorganizing advisory services, and capital market and fund placement services. The company faces competition from alternative asset managers as well as traditional asset managers that form part of the SPDR S&P 500 Index (SPY).

In the rest of this series, we’ll take a look at Blackstone’s expected private-market performance, public markets, credit, advisory, dividends, and valuations.

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