BlackRock, Inc. (BLK – Free Report) reported third-quarter 2017 adjusted earnings of $5.92 per share, which outpaced the Zacks Consensus Estimate of $5.59. Also, the bottom line came in 15% higher than the year-ago quarter.
Results benefited from improvement in revenues, rise in assets under management (AUM) and steady long-term inflows. However, increase in operating expenses acted as a headwind.
Net income (on a GAAP basis) came in at $947 million, up 8% from the prior-year quarter.
Revenue Growth Offsets Rise in Expenses
Revenues (GAAP basis) grew 14% year over year to $3.23 billion. The rise was driven by higher investment advisory, administration fees and securities lending revenues, technology and risk management revenues, and investment advisory performance fees. The reported figure surpassed the Zacks Consensus Estimate of $3.11 billion.
Total expenses amounted to $1.83 billion, up 13% year over year. This was due to a rise in all cost components except amortization of deferred sales commissions, which witnessed a fall.
Non-operating income (on a GAAP basis) came in at $10 million, up significantly from $1 million in the year-ago quarter.
BlackRock’s adjusted operating income came in at $1.4 billion, up 15% year over year.
Strong AUM & Inflows
As of Sep 30, 2017, AUM totaled $6 trillion, up 17% year over year. Further, during the reported quarter, the company witnessed long-term net inflows of $75.8 billion.
Share Repurchases
During the quarter, BlackRock repurchased shares worth $275 million.
Our Viewpoint
BlackRock remains well poised for opportunistic acquisitions, supported by a strong liquidity position. Moreover, its initiatives to gain market share in the ETF business are expected to drive revenue growth in the future. However, increased dependence on overseas revenues and regulatory restrictions are primary near-term concerns.
Currently, BlackRock carries a Zacks Rank #2 (Buy).
Among other investment managers, The Blackstone Group L.P. (BX – Free Report) is scheduled to announce third-quarter 2017 results on Oct 19 and Ameriprise Financial, Inc. (AMP – Free Report) on Oct 24 while Invesco Ltd. (IVZ – Free Report) is expected to release on Oct 26.
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