Blackrock, Inc. - Growth & Income

As the S&P continues to climb, more investors pile into equities. That's good news for Blackrock, Inc. (BLK). The investment management firm recently delivered its third consecutive positive earnings surprise driven by higher assets under management.

Earnings estimates have been surging since the latest earnings beat, sending the stock to a Zacks #1 Rank (Strong Buy).

Fourth Quarter Results

Blackrock reported fourth quarter earnings per share of $3.42, crushing the Zacks Consensus Estimate of $2.90. It was a 42% increase over the same quarter in 2009.

Revenue surged 61% as assets under management increased 6% to a total of $3.56 trillion (yes, that's trillion with a 'T'). Investors continue to increase their risk exposure due to a rising stock market.

Performance fees soared 161% as the company was able to exceed absolute and relative investment return thresholds.

Meanwhile, operating income surged 71% year-over-year.

Outlook

Earnings estimates have been moving higher over the last several months as the markets continue to climb.

Analysts unanimously revised their estimates higher following the latest earnings surprise. The Zacks Consensus Estimate for 2011 is $12.44, representing 14% growth over 2010 EPS. The 2012 estimate is currently $14.32, corresponding to 15% EPS growth.

It is a Zacks #1 Rank (Strong Buy) stock.

Dividend

Blackrock pays a dividend that yields 2.0%.

Since it began paying a dividend in 2003, the company has raised it at a compound annual growth rate of 26%.

Valuation

Shares trade at 16.2x forward earnings, and its PEG ratio is a reasonable 1.3.

Its price to book ratio of 1.5 is in-line with its peers.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

 
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