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What the World’s Biggest Asset Manager Earned in 1Q17

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1Q17 growth drivers

BlackRock (BLK), the world’s largest asset manager, is expected to post earnings per share (or EPS) of $4.88 for 1Q17 on April 13, 2017, a rise of 14.8% year-over-year.

The company is expected to post revenue of $2.9 billion, a rise of 8.5% compared to 1Q16. This growth will likely be reflective of its higher assets under management, the rising broad markets (SPX-INDEX) (SPY), higher flows in its ETFs, and its expense management.

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BlackRock has seen steady growth over the past few quarters, with 3Q16 and 4Q16 topping its EPS off at $5.14, beating analysts’ estimates. 

The company reported an adjusted net income of $852 million in 4Q16, a 6% rise over $801 million in 4Q15. Its revenue rose 1% on higher investment advisory activities, administration fees, and securities lending revenue, partially offset by lower performance fees.

BlackRock was managing total assets of ~$5.2 trillion on December 31, 2016, compared to ~$4.7 trillion in 2015. The number is expected to rise mainly due to iShares and institutional offerings. In 4Q16, the company saw a boost in its technology solutions on Aladdin’s 13% revenue rise.

BlackRock posted revenue of $11.2 billion in 2016, compared to the following revenues of its peers in the same period:

  • Bank of New York Mellon (BK): $3.6 billion
  • State Street (STT): $2.5 billion
  • JPMorgan Chase (JPM): $55.9 billion

Together, these companies account for 1.8% of the SPDR S&P 500 ETF (SPY).

Diversified offerings, clientele

BlackRock is managing $5.2 trillion in assets for sovereign wealth funds, institutions, corporates, retail clientele, and governments. The company manages funds through offerings such as index funds, alternatives, equities, fixed income, and money market instruments.

In this series, we’ll study BlackRock’s expected fund flows, outlook, iShares, competition, dividends, and valuations in 1Q17.

Let’s start by studying BlackRock’s iShares expected performance in 1Q17.

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