Stock (Symbol) |
BlackRock (BLK) |
Stock Price |
$387 |
Sector |
| Financial |
Data is as of |
| May 4, 2017 |
Expected to Report |
| Jul 12 |
Company Description |
 BlackRock, Inc. (BlackRock) is an independent investment management firm. Its product range includes single- and multi-asset class portfolios investing in equities, fixed income, alternatives and/or money market instruments. Source: Thomson Financial |
Sharek’s Take |
 BlackRock (BLK) is making money off ETFs as people flock to passive investments. BlackRock generated $80 billion on net inflows, representing 7% growth year-over-year, with $64 billion going into iShares ETFs. BlackRock is the worlds largest asset manager, with half of assets under management are in Stocks with a qtr in bonds and the remainder in multi-assets, alternatives and cash. In asset style, assets are divided between active management, index funds, and ETFs — which means 2/3rds of assets are passive investments with no money manager needed. And although the firm had $80 billion in inflows, investors pulled $7 billion from BlackRock’s actively managed funds last qtr. BlackRock is in the midst of overhauling its stock-picking business in an effort that has included layoffs, pricing changes and a greater emphasis on computer models that inform investments. Thus, investors are wanting low-cost investments and BlackRock is evolving to fill that need. BLK has an Estimated Long-Term Growth Rate of 13% per year, in addition to a fat 3% yield (that’s $10 in dividends per year). Management bought back $275 million in stock last qtr, which on an annualized basis is around 1.5% of BLK’s market cap. The stock’s P/E of around 18 is in line with where it should be. With the stock market going higher with funds flowing into index funds and ETFs, BlackRock has the wind at its back and I will add this stock to the Conservative Growth Portfolio. |
One Year Chart |
 Note: these charts and tables were done on 4/27 with the stock at $387. Today, 5/28, BLK is $407. Last qtr BLK delivered 12% profit growth on a 8% gain in sales, but missed profit estimates of 15% growth. Afterwards, 2017 estimates increased from $21.36 to $21.65 but qtrly estimates stayed relatively the same. BLK is not paying $10 in annual dividends when it’s making around $20 in profits — those are big numbers. Analysts have profit growth Estimates of 11%, 5%, 11% and 19% for the next 4 qtrs. The Est. LTG of 13% plus the 2% yield is good for a conservative stock such as this. |
Fair Value |
 My Fair Value on this stock is $390, which makes the stock fairly valued at this time. The issue is the stock market is rising and investors are flooding into ETFs and index funds, thus if we sit and wait we might have to buy the stock higher — which is exactly what I’m doing. |
Bottom Line |
 BlackRock has been a decent investment the past decade, but it seems like you have to own the stock when it’s in a uptrend — like now? And now with the company’s emphasis on computerizing money management, BLK could be a leader in artificially intelligent investing. But, I have studied the trends of passive vs. active investing and with the S&P 500 now “high” it seems active management is now the way to go for the next few years, but that’s not going to sway the herd from investing in what’s worked in the past. BLK will be added to the Conservative Growth Portfolio where it will rank 15th of 33 stocks. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 15 of 33 |
