BlackRock To Top The Earnings Consensus In Q4?

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Trefis
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BlackRock

BlackRock (NYSE: BLK) is scheduled to report its fiscal Q4 2022 results on Friday, January 13, 2023. We expect BlackRock to edge past the consensus estimates for earnings, while the revenues will likely match (just above) the expectations. The asset management giant surpassed the estimates in the last quarter, despite a 15% y-o-y decrease in the total revenues to $4.3 billion. The revenues mainly suffered due to the negative impact of the foreign exchange movement and lower market valuations. Notably, the average assets under management (AuM) decreased by 11% y-o-y. We expect the revenues to follow the same trend in the fourth-quarter results. 

We estimate BlackRock’s valuation to be around $621 per share which is 18% below the current market price. Our interactive dashboard analysis on BlackRock’s Earnings Preview has more details. 

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(1) Revenues expected to be in line with the consensus estimates

BlackRock’s revenues declined by 5% y-o-y to $13.5 billion in the first nine months of 2022. It was primarily driven by a 2% drop in the total investment advisory, administration fees & securities lending revenue (base fees), followed by a 65% decrease in the performance fees.

  • The base fees and performance fees are directly dependent on Assets under Management (AUM). The average AuM witnessed a drop in the first three quarters of 2022 due to negative FX movement and lower market levels. Notably, the average AuM at the end of Q3 stood at $8.48 trillion. We expect the fourth-quarter results to be on similar lines.
  • BlackRock technology services fees improved by 7% in the first three quarters of 2022. Further, we expect the momentum to continue in Q4.
  • Overall, we expect BlackRock’s revenues to remain around $17.78 billion for FY2022.

Trefis estimates BlackRock’s fiscal Q4 2022 revenues to be around $4.25 billion, in line with the $4.23 billion consensus estimate. 

(2) EPS is likely to edge past the consensus estimates

BlackRock Q4 2022 adjusted earnings per share (EPS) is expected to be $8.01 per Trefis analysis, almost 2% above the consensus estimate of $7.89. The adjusted net income decreased by 8% y-o-y to $3.9 billion in the first nine months of 2022 due to higher expenses as a % of revenues and lower non-operating income. We expect the expense figure to see some improvement in Q4.

Overall, BlackRock is likely to report an adjusted net income of $5.06 billion and annual GAAP EPS of $33.19 for the full-year 2022. 

(3) Stock price estimate is 18% lower than the current market price

We arrive at BlackRock’s valuation, using an EPS estimate of around $33.19 and a P/E multiple of just below 19x in fiscal 2022. This translates into a price of $621, which is 18% lower than the current market price. 

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year 

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 Returns Jan 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 BLK Return 6% 6% 98%
 S&P 500 Return 1% 1% 74%
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[1] Month-to-date and year-to-date as of 1/10/2023
[2] Cumulative total returns since the end of 2016

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