BlackRock (BLK) should continue to do well this quarter because the stock market continues to hit new highs. BLK had growth in all its asset classes last quarter — stocks, bonds and alternative investments — and its iShares ETF’s have been growing since 2009. The company continues to get inflows into its mutual funds, and that combined with the stock market rising means profits should continue to grow around 15% a quarter.
One Year Chart
BlackRock had a great year last year, as profits grew 21%, but that’s easy when the stock market goes up 30%. Now with a more subdued market the profit gains will be more muted. Still, 15% profit growth last quarter is good, especially considering the stock’s P/E is 16.
BLK also pays a dividend and my guess is the 2014 payout will be around $7.50, which is 2.5% of the stock price. So altogether investors could get 15% stock growth plus 2.5% in a dividend — not bad.
Fair Value
I feel BLK is worth 18 times earnings, that gives BLK upside of 10% to its 2014 Fair Value. Looking out to next year, there’s 25% upside. That would be a solid investment for a year and a half.
Sharek’s Take
BlackRock is what I would consider stability for a growth portfolio. It pays a solid dividend and the stock has the ability to grow 15% a year. Plus mutual fund companies are typically good investments. The only thing holding me back from buying is BLK only has 10% upside for this year and the estimated long-term growth rate is only 15% (I prefer 20% growers). I’ll continue to watch the stock, and may get it if it dips.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
