The Blackstone Group L.P. (BX) is scheduled to report its fourth-quarter and full-year 2014 results on Jan 29, before the market opens.
Last quarter, Blackstone delivered a negative earnings surprise of 15.4% on the back of higher expenses, partially offset by revenue growth on the back of an impressive increase in performance fees.
However, this investment manager has delivered a positive earnings surprise in three of the last four trailing quarters, with an average beat of 28.1%.
Will Blackstone be able to beat the estimates this time around or will it disappoint? Let us see how things have shaped up for this announcement.
Factors Influencing Q4 Results
Blackstone has been successfully raising money for many of its newly launched funds in spite of a challenging fund-raising environment for asset managers. Moreover, robust organic inflows have strengthened the capital position of the company, which if invested effectively will likely generate revenues in this quarter.
Blackstone remains relatively immune to the prevalent low interest rate environment as it primarily deals in asset management and private equity businesses. Moreover, with the gradual improvement in the overall economic scenario, the company’s fund-raising ability should aid performance fee growth, backed by the increasing risk appetite of investors.
In addition, the rising trend reflected in the company’s fee-earning and total assets under management (AUM) growth makes us optimistic of further improvement in AUM in the upcoming release.
However, weak expense management remains a major concern. The past few quarters have revealed rising expenses weighing on the company’s profitability. We anticipate this trend to persist in this quarter as well owing to higher compensation and benefit costs as the company’s well-performing funds require more headcount.
Blackstone’s activities during the quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate remained flat at 95 cents per share over the last 7 days.
Earnings Whispers
Our proven model does not conclusively show that Blackstone is likely to beat the Zacks Consensus Estimate in the fourth quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for Blackstone is 0.00%. This is because the Most Accurate estimate of 95 cents is at par with the Zacks Consensus Estimate.
Zacks Rank: Blackstone’s Zacks Rank #4 (Sell) further decreases the predictive power of ESP, making us less confident of an earnings surprise call.
Stocks to Consider
Here are a few finance stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Earnings ESP for CYS Investments, Inc. (CYS) is +3.13% and it has a Zacks Rank #1. The company is slated to report fourth-quarter 2014 results on Feb 9.
AXIS Capital Holdings Limited (AXS) has an Earnings ESP of +1.68% and carries a Zacks Rank #3. It is scheduled to release on Feb 3.
The Allstate Corporation (ALL) has an Earnings ESP of +1.81% and carries a Zacks Rank #1. It is scheduled to report on Feb 4.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment