BlackRock, Inc. BLK has been expanding its business globally through a series of acquisitions. The company has also taken initiatives to restructure its actively managed equities business. However, continued increase in expenses will likely hurt bottom- line growth to some extent.
In April 2018, BlackRock announced that it has signed a deal to acquire Tennenbaum Capital, while in November 2017 its announced a transaction to buy Citibanamex’s Asset Management business in Mexico. Over the years, the company has acquired several firms across the globe, expanding its footprint.
Therefore, its strong global presence along with broad product diversification, revenue mix and steadily improving assets under management will likely further boost revenues.
Moreover, gradual improvement in the market conditions, efforts to strengthen its iShares and ETF operations and increased focus on active equity business will likely further aid this Zacks Rank #3 (Hold) stock’s revenue growth, which saw a CAGR of 6% between 2012 and 2017.
Looking at the company’s price performance, its shares have gained 16.4% in the past year, outperforming 4.8% rally of the industry.
The company’s operating costs have witnessed a CAGR of 4.4% over the last six years (ending 2017), with the same trend continuing in the first three months of 2018. Rise in compensation and marketing costs are expected to keep expenses high, going forward.
However, Blackrock’s global presence has increased its dependence on overseas revenues in the last few years. Despite generating just about one-third of revenues from overseas markets, a number of risks stemming from regulatory and political environment, foreign exchange fluctuations and performance of regional economy can negatively affect its top-line growth.
Further, the Zacks Consensus Estimate for current-year earnings has declined slightly to $27.94 whereas for the next year, it has increased marginally to $30.90 in the last 30 days.
Some better-ranked stocks in the same space are America First Multifamily Investors, L.P ATAX, Virtus Investment Partners, Inc. VRTS, and Woori Bank WF. Woori Bank carries a Zacks Rank #1 (Strong Buy) whereas the other two carry Zacks rank #2 (Buy) You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the last 60 days, America First Multifamily Investors stock witnessed an upward earnings estimate revision of 18.2% for the current year. Its share price has increased 2.5% in the past three months.
Virtus Investment Partners’s earnings estimates for the current year have been revised 3% upward over the past 60 days. Its shares have gained 3.2% in the past three months.
Over the last 60 days, Woori Bank witnessed a 7.3% upward earnings estimate revision for the current year. Over the past three months, its share price has increased 10.8%.
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