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3 Investment Managers’ Q3 Earnings Preview: BLK, IBKR, GS

Zacks

Investment management industry, which is a part of the broader Finance sector performed decently over the past several quarters. In fact, following the Brexit sell-off, third quarter average assets under management (AUM) levels for majority of the firms witnessed a notable rise due to a sharp move in the markets early in the quarter. Particularly, the U.S. equity markets have managed to post decent gains in July and the S&P 500’s return in the third quarter came in at 3.11%.

Amid this, client asset growth is expected to be favorable in the to-be-reported quarter. Also trading activity is projected to be quite decent.

However, recently regulatory restrictions have created a challenging backdrop for traditional asset managers. Also, equity markets became volatile towards the end of the quarter and this raised concerns regarding the future prospects of the industry as a whole.

Notably, per our Earnings Preview report, overall earnings for the Finance sector in third-quarter 2016 are expected to be up 8.5% year over year.

Now, let’s have a look at the three investment management stocks that are scheduled to report their earnings tomorrow.

BlackRock, Inc. BLK is scheduled to announce its results before the opening bell. The company is quite likely to beat the Zacks Consensus Estimate in the quarter because of an anticipated increase in average AUM, which is expected to boost margins on a sequential basis.

However, revenue growth is likely to remain challenging and several macroeconomic factors may affect the company’s results. (Read more: Will BlackRock Be Able to Beat Q3 EarningsEstimates?)

Notably, this stock lagged the Zacks Consensus Estimate in three of the trailing four quarters. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BLACKROCK INC Price and EPS Surprise

BLACKROCK INC Price and EPS Surprise | BLACKROCK INC Quote


Interactive Brokers Group, Inc. IBKR, which is set to announce its results after market closes has a Zacks Consensus Estimate of 32 cents for the upcoming release. It reflects a year-over-year decline of about 9.52%. Notably, the Zacks Consensus Estimate fell approximately 3.0% over the past 30 days.

Also, it is difficult to conclusively predict an earnings beat this quarter as the company carries a Zacks Rank #3 (Hold) with an Earnings ESP of 0.00%.

Notably, the company delivered average positive earnings surprise of 10.13% in the trailing four quarters as depicted in the chart below.

INTERACTIVE BRK Price and EPS Surprise

INTERACTIVE BRK Price and EPS Surprise | INTERACTIVE BRK Quote

The Goldman Sachs Group, Inc. GS is also set to announce its results before the opening bell. The company is not likely to beat the Zacks Consensus Estimate in the quarter because of a challenging environment, low interest rates and global growth concerns.

However, Fixed Income, Currency and Commodities Client Execution, which is one of the major sources of Goldman’s revenues is likely to move north whereas trading in equities is likely to remain subdued due to lower client activity. (Read more: Will Goldman Stock Continue to Rise Post Q3 Earnings?)

Notably, this stock carrying a Zacks Rank #3 surpassed the Zacks Consensus Estimate in three of the trailing four quarters as depicted in the chart below.

GOLDMAN SACHS Price and EPS Surprise

GOLDMAN SACHS Price and EPS Surprise | GOLDMAN SACHS Quote

Check our full write-up on earnings releases of these stocks later.

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