BlackRock, Inc. BLK is scheduled to announce first-quarter 2015 results on Apr 16, before the market opens.
Last quarter, BlackRock was able to surpass the Zacks Consensus Estimate driven by a slight fall in operating expenses and stable revenue growth. Also, robust inflows helped as well.
Will BlackRock be able to sustain its profitability this quarter? Or will it disappoint? Let us see how things have shaped up for this announcement.
Factors to Impact Q1 Results
BlackRock’s diversified footprint and strong product mix, along with an increased focus on organic growth, have helped it improve revenue generation over the years. We expect the top-line growth to continue in this quarter too, given the company’s brand initiatives for the iShares and ETF business.
However, fee income is anticipated to be adversely impacted by lower level of average assets under management (“AUM”) led by weakness in equity markets and a strengthening dollar. This, we believe, will slightly weigh on the quarterly revenues.
Additionally, BlackRock’s profitability will likely be burdened with rising expenses triggered by higher regulatory costs. However, direct fund expenses as well as distribution and servicing costs could decline in the quarter on account of sluggish AUM growth. But overall, operating expenses for the quarter are predicted to remain elevated.
BlackRock’s activities during the quarter proved inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate declined nearly 1% to $4.51 per share over the last 7 days.
Earnings Whispers
Our proven model shows that BlackRock is likely to miss the Zacks Consensus Estimate in the upcoming release. That 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. This is not the case here as you will see below.
Zacks ESP: The Earnings ESP for BlackRock is -2.66%. This is because the Most Accurate estimate stands below the Zacks Consensus Estimate.
Zacks Rank: BlackRock’s Zacks Rank #3 (Hold) marginally increases the predictive power of ESP. However, we need to have a positive ESP to be fully sure of an earnings beat.
Stocks That Warrant a Look
Here are a few bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
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.
The Blackstone Group L.P. BX has an Earnings ESP of +4.17% and carries a Zacks Rank #2. It is scheduled to report results on Apr 16.
Lazard Ltd. LAZ has an Earnings ESP of +1.45% and a Zacks Rank #3. It is slated to report results on Apr 23.
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