BlackRock Inc.’s (BLK) first quarter 2011 operating earnings of $2.96 per share substantially exceeded the Zacks Consensus Estimate of $2.75. Although it compared unfavorably with the prior quarter’s earnings of $3.42, it was ahead of prior-year quarter’s earnings of $2.40.
Operating results for the quarter excluded expense associated with certain LTIP awards and deferred compensation plans.
GAAP net income came in at $568 million or $2.89 per share for the reported quarter as against $657 million or $3.35 per share in the prior quarter and $423 million or $2.17 per share in the year-ago quarter.
Better-than-expected results compared with the prior-year quarter were primarily due to strong top-line growth and improved equity markets, which were offset partially by higher operating expenses.
Quarter in Detail
On an operating basis, BlackRock’s total revenue in the quarter increased 15.1% sequentially but decreased 9.0% year over year to $2.15 billion. Total revenue missed the Zacks Consensus Estimate of $2.26 billion.
GAAP total expenses declined 4% sequentially but climbed 11% year over year to $1.48 billion. The year-over-year increase reflects a significant rise in employee compensation and benefits expenses, general and administration expenses, and direct fund expenses.
BlackRock’s operating income on a GAAP basis stood at $798 million in comparison with $940 million in the preceding quarter and $654 million in the year-earlier quarter.
Asset Position
Assets under management totaled $3.648 trillion as of March 31, 2011, up 2% sequentially and 8% year over year. The increase was driven by market and investment performance of $100 billion and net new business in long term products of $34.7 billion.
Peer Performance
BlackRock’s major competitor The Blackstone Group’s (BX) first quarter earnings beat the Zacks Consensus Estimate. The results were aided by a strong revenue growth, improved equity markets, and lower operating expenses.
Our Take
Though there are concerns over the sluggish equity market recovery, BlackRock’s businesses — BlackRock Solutions and the advisory business — will continue to benefit from the growing need for risk management solutions within the financial industry.
BlackRock currently retains a Zacks # 3 Rank, which translates into a short-term Hold” rating.
BLACKROCK INC (BLK): Free Stock Analysis Report
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