BlackRock (BLK) put out some nice numbers when it reported earnings late last month. Assets grew 19% year-over-year. That plus share buybacks combined to have profits increase 18%.
Here’s some key bullet points about BlackRock’s business and quarterly results:
- Around 60% of assets are in stocks, around 30% in bonds, and the other 10% in alternative or other assets.
- The company has three main divisions: Retail, iShares and Institutional.
- Approximately 10% of assets are in Retail, 25% iShares, and 65% Institutional assets.
- 1/3rd of fees come from Retail, 1/3rd iShares and 1/3rd Institutional.
- The company asset had money inflows of 4% for the quarter. Retail had inflow growth of 10%, iShares grew 13% and lower fee institutional assets had outflows of 1%.
- Last quarter the company beat the $4.45 profit estimate by 44 cents.
The Institutional outflows are fine by me, the company has 2/3rds of its assets coming from that division yet it yields only 1/3rd of the fees. Keep building the Retail and iShares BlackRock.
One Year Chart
BlackRock has had a good year, and in retrospect I should have bought in on the dip at $265 last September.
Annual Profits have been on a steady climb higher since the Bear Market in 2008-2009. BLK has an estimated annual growth rate of 16% per year, plus investors get a dividend of around 2.5% per year. So I think you can make 18% a year total-return in BLK.
Fair Value
I feel BLK is worth 18 times earnings, and the stock’s slighty undervalued right now.
Sharek’s Take
I love BlackRock the company, as mutual fund companies and asset managers are usually good investments that often outperform the mutual funds they offer. The issue I have with the stock is I like to collect 20% growers, and this stock doesn’t point to me getting a 20% return. Also, I think the stock market is high right now and a lot of the past stock market gains will be hard to replicate. If the market corrects, it will probably hurt BLK’s results. In the end I need the stock to fall before I climb aboard.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
