A stock market correction — by the way we went into a correction two days ago — could BlackRock (BLK) could make shares of BlackRock cheap.
Right now the stock is $299, which is 16 times earnings. At 16 times, BLK is undervalued now, but since this is only a teens-grower, I need more than teens returns to buy into the shares.
One Year Chart
Profit growth has been good in the last year, but it’s estimated to be only 11% this year. I feel BLK should beat the street, but the degree it does will depend on the stock market’s gains this year. Right now we are in a correction, and the market is down around 3% ytd on the last trading day of the month. A down January often leads to a down year for the stock market.
BLK has an estimated long-term growth rate of 14% a year and also pays a dividend of 2-3%. That’s 16% to 15% total return per year, and the stock’s not bad at 16 times earnings. The problem is if the market is down/flat that will restrict 2014 profits from popping, and only 11% profit growth is expected this year. I don’t think the stock can rally much — if at all — on 11% profit growth.
Fair Value
Mutual fund stocks have always been some of the best stock market investments you can make. I put BLK’s Fair Value P/E at 19 times earnings. The stock’s undervalued now.
Sharek’s Take
BlackRock is a stock I will buy if it goes through a big correction. Check the ten-year chart and you can see the stock’s been on sale before. In 2012 Q4 BLK sold for only 14 times earnings. I should have invested then. This stock is on my radar, and if conservative investors get in they should hold for the very long-term. This is a good company.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
