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Category: Stock Market and BlackRock
Date: 16 October 2019 Stock Price: $444.45 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of BlackRock the fiduciary firm that has approximately $6.93 trillion in assets under management on behalf of clients across the world.
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About BlackRock
BlackRock helps investors build better financial futures. As a fiduciary to investors and a leading provider of financial technology, our clients turn to us for the solutions they need when planning for their most important goals. As of June 30, 2019, the firm managed approximately $6.84 trillion in assets on behalf of investors worldwide
BlackRock 3rd quarter 2019 revenue breakdown
Overview of BlackRock's latest earnings report
Data below is reported for the latest quarter unless stated otherwise
- Revenue: $3.692 billion (down from $3.576 billion for the same quarter of the previous year)
- Revenue increased by 3% over the last 12 months
- Total expenses: $2.190 billion (up from $2.180 billion for the same quarter of the previous year)
- Total expenses increased by 0.45% over the last 12 months
- Net income: $1.119 billion (down from $1.203 billion for the same quarter of the previous year)
- Diluted earnings per share: $7.15 (down from $7.54 for the same quarter of the previous year)
- PE ratio: 15.54
- Dividend declared for quarter: $3.30 (up from $3.13 for the same quarter of the previous year)
- Dividend yield: 2.96%
- Diluted weighted-average shares outstanding: 155.173 million (down from 159.804 million for the same quarter of the previous year)
- Assets under management by BlackRock: $6.963 trillion (up from $6.444 trillion for the same quarter of the previous year)
- Total net inflows for the quarter: $84.246 billion
BlackRock's management commentary on the results and outlook
New York, October 15, 2019 – BlackRock, Inc. (NYSE: BLK) today reported financial results for the three and nine months ended September 30, 2019.
Laurence D. Fink, Chairman and CEO: “Clients are increasingly looking for strategic partners who understand their whole portfolio and investment goals in the context of a complex and changing landscape. Clients have entrusted BlackRock to manage almost $350 billion in new assets over the last twelve months, validating the differentiation of our model. BlackRock’s globally integrated platform, bringing together cash, index, factors, active and alternatives with Aladdin’s portfolio and risk management technology, is better positioned than ever before to provide solutions to clients. “BlackRock generated $84 billion of total net inflows in the third quarter, demonstrating strength in fixed income, cash and alternative strategies, as clients re-balanced, de-risked and sought uncorrelated sources of return in the face of significant global market volatility. “Technology services revenue increased 30% year-over-year, driven by growth in Aladdin and our eFront acquisition. Aladdin’s comprehensive investment operating system powers BlackRock’s digital offerings and enables asset and wealth managers to scale and grow their businesses. “Clients worldwide are demanding transparency, convenience and a focus on their outcomes. BlackRock’s broadly diversified asset management and technology platform is well positioned to meet this client demand and deliver growth for shareholders.”
- $84 billion of quarterly total net inflows, or 5% organic asset growth, driven by continued momentum in fixed income and cash
- 3% increase in revenue year-over-year driven by higher base fees and technology services revenue, partially offset by lower performance fees
- 30% increase in technology services revenue year-overyear reflects Aladdin® growth and the impact of the eFront acquisition
- 8% increase in operating income (7% as adjusted) yearover-year, driven in part by lower transaction-related expense in the current quarter
- 5% decrease in diluted EPS year-over-year reflects lower nonoperating income and a higher effective tax rate in the current quarter
- $100 million of share repurchases in the current quarter, bringing year-to-date repurchases to $1.7 billion
Laurence D. Fink, Chairman and CEO: “Clients are increasingly looking for strategic partners who understand their whole portfolio and investment goals in the context of a complex and changing landscape. Clients have entrusted BlackRock to manage almost $350 billion in new assets over the last twelve months, validating the differentiation of our model. BlackRock’s globally integrated platform, bringing together cash, index, factors, active and alternatives with Aladdin’s portfolio and risk management technology, is better positioned than ever before to provide solutions to clients. “BlackRock generated $84 billion of total net inflows in the third quarter, demonstrating strength in fixed income, cash and alternative strategies, as clients re-balanced, de-risked and sought uncorrelated sources of return in the face of significant global market volatility. “Technology services revenue increased 30% year-over-year, driven by growth in Aladdin and our eFront acquisition. Aladdin’s comprehensive investment operating system powers BlackRock’s digital offerings and enables asset and wealth managers to scale and grow their businesses. “Clients worldwide are demanding transparency, convenience and a focus on their outcomes. BlackRock’s broadly diversified asset management and technology platform is well positioned to meet this client demand and deliver growth for shareholders.”
BlackRock (NYSE: BLK) stock price history
The image below, obtained from Google, shows the stock price history of BlackRock over the last 5 years. And it's been a very good time for BlackRock stockholders. 5 years ago it was trading at $315.70 and its currently trading at around $420.38 a stock. That's a return of 40.7% provided to BlackRock stockholders over the last 5 years. While the returns aren't bad the opportunity cost of holding BlackRock stock that made just 40.70% over the last 5 years compared to holding Netflix for example that made over 300% becomes very significant.
The stock of BlackRock is trading at closer to its 52 week high of $487.45 than it is to its 52 week low of $360.79, which to us is indication that sentiment and momentum of BlackRock's stock is positive at this point in time
The stock of BlackRock is trading at closer to its 52 week high of $487.45 than it is to its 52 week low of $360.79, which to us is indication that sentiment and momentum of BlackRock's stock is positive at this point in time
BlackRock (NYSE: BLK) stock price history over the last 5 years
Recent coverage of BlackRock
The extract below discusses the latest regarding BlackRock as obtained from TheStreet.com
BlackRock (BLK - Get Report) reported third-quarter earnings of $7.15 a share, beating estimates of $6.96, as the money manager reported $84 billion of quarterly net inflows, up from a year-earlier loss of $3.11 billion. The company reported year-earlier adjusted earnings of $7.52 a share. The stock was up 0.9% in trading Tuesday to $438.16.
Revenue in the period rose 3% to $3.69 billion "driven by higher base fees and technology services revenue, partially offset by lower performance fees," BlackRock said in a statement. Assets under management in the quarter were more than $6.96 trillion. "Clients are increasingly looking for strategic partners who understand their whole portfolio and investment goals in the context of a complex and changing landscape," said Laurence Fink, BlackRock chairman and CEO, in a statement. "Clients have entrusted BlackRock to manage almost $350 billion in new assets over the last 12 months."
Read the full article here
BlackRock (BLK - Get Report) reported third-quarter earnings of $7.15 a share, beating estimates of $6.96, as the money manager reported $84 billion of quarterly net inflows, up from a year-earlier loss of $3.11 billion. The company reported year-earlier adjusted earnings of $7.52 a share. The stock was up 0.9% in trading Tuesday to $438.16.
Revenue in the period rose 3% to $3.69 billion "driven by higher base fees and technology services revenue, partially offset by lower performance fees," BlackRock said in a statement. Assets under management in the quarter were more than $6.96 trillion. "Clients are increasingly looking for strategic partners who understand their whole portfolio and investment goals in the context of a complex and changing landscape," said Laurence Fink, BlackRock chairman and CEO, in a statement. "Clients have entrusted BlackRock to manage almost $350 billion in new assets over the last 12 months."
Read the full article here
BlackRock Office in New York. Image obtained by Risk.net
BlackRock (NYSE: BLK) latest stock valuation
So what is BlackRock stock worth based on the release of their latest earnings report? Based on BlackRock's latest earnings report provided our valuation model provides a target (full value) price at $443.10 a BlackRock stock. We therefore believe that the stock of BlackRock is fully valued.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $443.10 Therefore we see a good entry point into BlackRock's stock at $398.80 or below. We expect the stock of BlackRock to trade mostly sideways in coming weeks and months as the stock is close to what we believe its full value is.
The current valuation of $443.10 is significantly higher than our valuation of BlackRock based on their 2nd quarter 2019 earnings in which we valued the stock of BlackRock at $409.60. This is largely due to the massive net inflows of the group and their strong stock repurchase program, both of these factors will lead to greater earnings per BlackRock share in future.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $443.10 Therefore we see a good entry point into BlackRock's stock at $398.80 or below. We expect the stock of BlackRock to trade mostly sideways in coming weeks and months as the stock is close to what we believe its full value is.
The current valuation of $443.10 is significantly higher than our valuation of BlackRock based on their 2nd quarter 2019 earnings in which we valued the stock of BlackRock at $409.60. This is largely due to the massive net inflows of the group and their strong stock repurchase program, both of these factors will lead to greater earnings per BlackRock share in future.