Will BlackRock Stock Beat Estimates in the Third Quarter?

BlackRock (NYSE: BLK) is scheduled to report its fiscal Q3 2023 results on Friday, October 13, 2023. We hope BlackRock
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Beating consensus estimates for revenue and earnings. The company beat earnings expectations last quarter, while revenue fell slightly below target. It recorded total revenues of $4.46 billion – down 1% year-on-year, primarily due to a slight decline in base fees (total investment advisory, administration fees and securities lending revenues) and distribution revenues. In terms of assets under management, the firm posted an average AUM of $9.19 trillion in the quarter – up 2% year-over-year. We expect to see year-over-year growth in the top line in the third quarter. Our interactive dashboard analysis continues BlackRock Earnings Preview There are more details.

We estimate BlackRock’s valuation at approximately $803 per share, which is 24% above the current market price. Interestingly, BlackRock stock’s Sharpe ratio was 0.4 Since the beginning of 2017, which is less 0.6 for the S&P 500 index over the same period. It is compared to Sharp of 1.23 For Trefis Reinforced Value Portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.

(1) Revenue is expected to top consensus estimates

BlackRock’s revenue for the first half of fiscal 2023 fell 6% to $8.7 billion.

• Base fees declined 5% year-over-year in the first two quarters of the year. Similarly, delivery charges declined by 14% in the same period. We hope to see some improvement in the figures in the third quarter.
• BlackRock technology services fees increased 4% year over year. We expect the same trend to continue in the third quarter as well.
• Overall, BlackRock’s revenue is expected to reach $18.38 billion in fiscal 2023.

Trefis estimates BlackRock’s fiscal Q3 2023 revenue will be about $4.62 billion, slightly above the consensus estimate of $4.57 billion.

2) To beat EPS consensus

BlackRock Q3 2023 adjusted earnings per share are expected to be $8.72 per Trefis analysis, 2% above the consensus estimate of $8.56. Adjusted net income for the first two quarters of 2023 was $2.52 billion, at the same level as the year-ago figure. As noted, net income increased 27% last quarter due to improvement in non-operating income. We expect the numbers to be similar in the third quarter. Overall, BlackRock is expected to report annual GAAP EPS of $34.19 for full-year 2023.

(3) The stock price estimate is 24% higher than the current market price

We arrive at BlackRock’s valuation using an EPS estimate of approximately $34.19 in fiscal 2023 and a P/E multiple above 23x. This translates to a price of $803, which is 24% above the current market price.

Note: P/E multiples are based on year-end stock price and reported (or expected) adjusted earnings for the full year.

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