BlackRock, Inc. (BLK - Analyst Report) reported fourth-quarter adjusted earnings of $4.82 per share, surpassing the Zacks Consensus Estimate of $4.68 for the fifth consecutive quarter. However, this compared unfavorably with the year-ago quarter figure of $4.92.

For the full year 2014, adjusted earnings per share came in at $19.34, up 17% year over year. This also outpaced the Zacks Consensus Estimate of $19.24.

Robust inflows proved to be the major contributor to the better-than-expected results. Top-line growth remained mute. However, growth in assets under management (AUM) continued to be impressive.

After considering certain non-recurring items, net income for BlackRock summed $813 million or $4.77 per share, down from $841 million or $4.86 per share in the prior-year quarter.

For 2014, net income (after considering certain non-recurring items) rose 12% year over year to $3.3 billion.

Quarter in Detail

Adjusted revenue totaled $2.68 billion in line with the year-ago quarter figure. Additionally, the reported figure missed the Zacks Consensus Estimate of $2.86 billion.

For 2014, adjusted revenue climbed 9% year over year to $10.7 billion. However, it lagged the Zacks Consensus Estimate of $11.0 billion.

Total expenses amounted to $1.64 billion, down marginally on a year-over-year basis. Decline in general and administration expenses along with lower amortization of intangible assets were largely offset by higher direct fund expenses as well as distribution and servicing costs.

Non-operating expenses, net of non-controlling interests stood at $53 million compared with non-operating income of $15 million in the prior-year quarter.
 

BlackRock’s adjusted operating income came in at $1.16 billion, up 1% from the year-ago quarter.

As of Dec 31, 2014, AUM totaled $4.65 trillion, rising 8% year over year. Further, the company witnessed total long-term inflows of $87.8 billion.

Capital Deployment Activities

Concurrent with the earnings release, BlackRock announced a 13% hike in its quarterly cash dividend to $2.18 per share. The dividend will be paid on Mar 24 to shareholders of record as of Mar 6.

The company bought back shares worth about $250 million in the reported quarter. Moreover, the authorization of an additional 6.0 million shares under the current repurchase program was announced by the company, with the total outstanding shares aggregating 9.4 million.

Our Viewpoint

BlackRock’s enhanced capital deployment initiatives are bound to lift investors’ confidence in the stock. The company’s efforts to boost the exchange-traded fund (ETF) business are expected to result in improved revenue generation going forward.

However, the company’s weak expense management along with the persistently high dependence on fee-based revenues remains a concern.

Currently, BlackRock carries a Zacks Rank #3 (Hold).

Among other investment managers, Ameriprise Financial, Inc. (AMP - Analyst Report), Invesco Ltd. (IVZ - Analyst Report) and Waddell & Reed Financial, Inc. (WDR- Analyst Report) are scheduled to release fourth-quarter and full year earnings results on Jan 28, Jan 29 and Feb 3, respectively.