BlackRock Surpasses Estimates - Analyst Blog

BlackRock Inc.'s (BLK) fourth quarter 2010 operating earnings of $3.42 per share were substantially ahead of the Zacks Consensus Estimate of $2.90. This also surpassed the prior quarter's earnings of $2.75 and the prior-year quarter's earnings of $2.39.

For full-year 2010, BlackRock reported operating earnings of $10.94 per share beating the Zacks Consensus Estimate of $10.39 and the prior year's earnings of $7.13.

Operating results for the quarter excluded restructuring charges and BGI transaction and integration costs and compensation expense associated with certain LTIP awards.

GAAP net income came in at $657 million or $3.35 per share for the reported quarter compared with $551 million or $2.83 per share in the prior-year quarter and $256 million or $1.62 per share in the year-ago quarter. For fiscal 2010, GAAP net income was $2,063 million or $10.55 per share, up from $875 million or $6.11 per share in 2009.

Better-than-expected results were primarily aided by a strong growth in top line, benefits of the BGI acquisition and improved equity markets, which were offset partially by higher operating expenses.

Quarter in Detail

On an operating basis, BlackRock's total revenue in the quarter increased 20.6% from the prior quarter and 65.1% year over year to $2.36 billion, beating the Zacks Consensus Estimate of $2.27 billion. For full year, total revenue was $8.10 million compared with $4.12 million in 2009, substantially missing the Zacks Consensus Estimate of $8.38 billion.

GAAP total expenses climbed 12% sequentially and 34% year over year to $1.55 billion. The increase reflects a significant rise in employee compensation and benefits expenses, general and administration expenses and direct fund expenses.

BlackRock's operating income on a GAAP basis stood at $940 million compared with $707 million in the prior quarter and $389 million in the prior-year quarter.

Asset Position

Assets under management totaled $3.561 trillion as of December 31, 2010, up 3% sequentially. The increase was driven by market and investment performance of $132.1 billion and net new business of $23.9 billion, which were partially offset by merger-related outflows of $38.7 billion.

Our Take

Though there are concerns related to the sluggish equity market recovery, BlackRock's businesses – BlackRock Solutions and the advisory business – will continue to be benefited from the growing need of risk management solutions within the financial industry.

BlackRock's major competitor – Ameriprise Financial Inc. (AMP) is scheduled to release its fourth quarter results on February 2.

BlackRock currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.

 
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