3 Things to Watch When BlackRock Reports Q1 Earnings

Photo Credit: Scott Beale

BlackRock, Inc (BLK) Financials - Capital Markets | Reports April 14, Before Market Opens

Key Takeaways

• The Estimize consensus is looking for EPS of $4.41 on $2.75 billion in revenue, 12 cents higher than Wall Street on the bottom line and $25 million greater in sales
• The company derives significant earnings from its iShares ETF offerings which is slowly losing its position as the dominant horse in the ETF race
• Like its peers, BlackRock has been adversely impacted from the foreign exchange market, sluggish interest rate growth and higher expenses
• What are you expecting for BLK? Get your estimate in here!

BlackRock, the world’s largest asset manager, is scheduled to report first quarter earnings Thursday, before the market opens. The financial services company is coming off a mixed fourth quarter in which it missed on the bottom line but beat its sales target by $25 million. Meanwhile, year over year comparisons were relatively meager in fiscal 2015. Thursday’s earnings are likely to continue the downward trend and come in lower than the previous quarter. The Estimize consensus is looking for EPS of $4.41 on $2.75 billion in revenue, 12 cents higher than Wall Street on the bottom line and $25 million greater in sales. However, our Select Consensus, a weighted average of our historically most accurate analysts and recent estimates, is expecting a more modest beat of 10 cents and $5 million. Compared to the same period last year, EPS is predicted to decline 9% despite a 2% increase in revenue. The company derives a significant portion of its earnings from its iShares ETF offerings which is slowly losing its position as the dominant provider in the ETF space. 

Like its peers, BlackRock has been adversely impacted from the foreign exchange market, sluggish interest rate growth and higher expenses. The gains it made from the positive market momentum in the first 3 months of 2016 were more than offset by the losses from a strong U.S. Dollar. Furthermore, we are still waiting on the Fed to raise interest after the initial bump at the end of 2015. This has put pressure on BlackRock’s retail sector which is generating weak net interest income lately. The company also continues to see challenges in its industry leading ETF division which has failed to introduce new offerings and attract funds as competition heightens. Still, the company appears to be well positioned to bounce back in the near term.