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BlackRock’s (BLK) Q4 Earnings Beat Estimates, Expenses Rise


BlackRock, Inc. BLK posted fourth-quarter and full-year 2017 results. Adjusted earnings for the quarter came in at $6.24 per share, which outpaced the Zacks Consensus Estimate of $6.08. Also, the bottom line came in 21% higher than the year-ago quarter.

Results benefited from an improvement in revenues, rise in assets under management (AUM) and steady long-term inflows. However, increase in operating expenses acted as a headwind.

Net income (on a GAAP basis) for the quarter came in at $2.30 billion, up significantly from the prior-year quarter.

Full-year adjusted earnings per share of $22.60 improved 17% year over year. Also, it surpassed the Zacks Consensus Estimate of $22.47. GAAP net income for the year was $4.97 billion, up 57% year over year.

Both fourth quarter as well as full year 2017 GAAP net income included $1.2 billion of net tax benefit related to the Tax Cuts and Jobs Act.

Revenue Growth Offsets Rise in Expenses

Revenues (GAAP basis) for the quarter came in at $3.47 billion, increasing 20% year over year. The rise was driven by higher investment advisory, administration fees and securities lending revenues, technology and risk management revenues, and investment advisory performance fees. The reported figure surpassed the Zacks Consensus Estimate of $3.35 billion.

For 2017, GAAP revenues were $12.49 billion, up 12% compared with the prior year. The reported figure also surpassed the Zacks Consensus Estimate of $12.37 billion.

Total expenses for the quarter amounted to $1.98 billion, reflecting an increase of 19% year over year. This was due to a rise in all cost components except amortization of deferred sales commissions and amortization of intangible assets, which witnessed a decline.

Non-operating income (on a GAAP basis) came in at $1 million against non-operating expense of $38 million in the year-ago quarter.

BlackRock’s adjusted operating income came in at $1.49 billion, up 21% year over year.

Strong AUM & Inflows

As of Dec 31, 2017, AUM totaled $6.3 trillion, reflecting an increase of 22% year over year. Further, during the reported quarter, the company witnessed long-term net inflows of $80.58 billion.

Dividend Hike

Concurrently, the company declared quarterly cash dividend of $2.88 per share, a hike of 15% from the prior payout. The dividend will be paid on Mar 22, to shareholders of record as of Mar 7.

Our Viewpoint

BlackRock remains well poised for opportunistic acquisitions, supported by a strong liquidity position. Moreover, its initiatives to gain market share in the ETF business are expected to drive revenue growth in the future. However, increased dependence on overseas revenues remains a primary near-term concern.

BlackRock, Inc. Price, Consensus and EPS Surprise

BlackRock, Inc. Price, Consensus and EPS Surprise | BlackRock, Inc. Quote

Currently, BlackRock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other investment managers, Ameriprise Financial, Inc. AMP is scheduled to announce fourth-quarter 2017 results on Jan 24. T. Rowe Price Group, Inc. TROW is expected to release results on Jan 30 and The Blackstone Group L.P. BX is scheduled to come up with its financial numbers on Feb 1.

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