We expect The Blackstone Group L.P. BX to beat expectations when it reports first-quarter 2015 results on Apr 16, before the market opens.
Why a Likely Positive Surprise?
Our proven model shows that Blackstone is likely to beat earnings as it has the right combination of two key components. Note that 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) to have a significantly higher chance of beating earnings.
Zacks ESP: The Earnings ESP for Blackstone is +4.17%. This is because the Most Accurate estimate of $1.00 stands above the Zacks Consensus Estimate of 96 cents.
Zacks Rank: Blackstone’s Zacks Rank #2 (Buy) increases the predictive power of ESP. The combination of the company’s Zacks Rank #2 and a positive ESP makes us confident of an earnings beat.
Factors Influencing Q1 Results
Blackstone has been successfully raising money for many of its newly launched funds in spite of a challenging environment. Also, robust organic inflows have strengthened the company’s position, which if invested effectively, will likely generate good revenues in this quarter.
Additionally, with gradual improvement in the overall economic scenario, Blackstone’s fund-raising ability should aid an enhancement in performance fees, backed by increasing risk appetite of investors. Further, the rising trend reflected in the company’s fee-earning and total assets under management (“AUM”) makes us optimistic regarding further improvement in AUM in the upcoming release.
Nevertheless, mounting expenses remain a major concern for Blackstone. We anticipate operating expenses to rise in the quarter due to higher compensation and benefit costs, as the company’s well-performing funds require more headcount. However, this will likely be marginally offset by lower non-compensation expenses attributable to the company’s initiatives to contain the same.
Blackstone’s activities during the quarter were sufficient to win analysts’ confidence. As a result, the Zacks Consensus Estimate grew 3.2% to 96 cents per share over the last 7 days.
Other Stocks to Consider
Blackstone is not the only firm looking up this earnings season. We also expect earnings beat from following asset managers:
Ameriprise Financial, Inc. AMP has an Earnings ESP of +1.28% and carries a Zacks Rank #3. It is scheduled to report results on Apr 22.
T. Rowe Price Group, Inc. TROW has an Earnings ESP of +0.89% and carries a Zacks Rank #3. It is scheduled to report results on Apr 22.
Lazard Ltd. LAZ has an Earnings ESP of +1.45% and a Zacks Rank #3. It is slated to report results on Apr 23.
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