BlackRock Consistently Beating Estimates and Improving Earnings

Beating index, managers

BlackRock (BLK), the world’s largest asset manager, beat its estimates in 4Q17. BlackRock has demonstrated consistency in improving its operating performance over the past couple of years.

The company has benefited from a rise in broad markets (SPY) (SPX-INDEX), helped by fundamentals and fund flows. In 4Q17, BlackRock posted EPS (earnings per share) of $6.24, compared to estimates of $6.02.

That figure reflects higher flows into ETFs and retail clientele deploying money into equity. The flows remained positive for the institutional group but declined on a year-over-year basis.

BlackRock Consistently Beating Estimates and Improving Earnings

BlackRock managed $6.3 trillion on December 31, 2017, helped by $103.0 billion in new flows for 4Q17. That number could rise in 2018, as the company is consistently raising funds across retail, an institutional and iShares category in equity and debt-related offerings.

Any major correction can impact flows negatively, although markets look buoyant given the earnings expectations and fundamentals.

ETFs dominate

BlackRock has regained ground in exchange-traded funds (or ETFs) when compared with other managers such as Vanguard, State Street Advisors (STT), and J.P. Morgan (JPM).

BlackRock’s revenues rose 20.0% to $3.5 billion in 4Q17. Its operating income expanded 22.0% to $1.5 billion, reflecting economies of scale and expense management. The company added $55.0 billion through ETF offerings, reflecting strong investor preference for equities and debt through low-cost, theme-based offerings.

In fiscal 2017, BlackRock’s assets under management increased by a record 22.0%. It recorded net income growth of 57% to $5.0 billion, reflecting increased operating efficiency and lower administrative spending.

In this series, we’ll study BlackRock’s expected performance in 2018 and strong performance in 4Q17, strategic initiatives, fund flows, and outlook. We’ll also examine its competition, iShares offerings, dividends and repurchases, and valuations.