Rise in AUM Likely to Aid BlackRock's Q3 Earnings, High Costs to Hurt

BlackRock BLK is slated to report third-quarter 2024 results on Oct. 11 before the opening bell. Its revenues are expected to have improved on a year-over-year basis, while earnings are likely to have declined.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.In the second quarter of 2024, BLK’s earnings surpassed the Zacks Consensus Estimate. Results benefited from a rise in revenues, partially offset by higher expenses and a fall in non-operating income. Further, BLK’s assets under management (AUM) touched $10.65 trillion, driven by net inflows and market appreciation.BlackRock has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 11.56%. BlackRock, Inc. Price and EPS Surprise BlackRock, Inc. price-eps-surprise | BlackRock, Inc. QuoteBefore we take a look at what our quantitative model predicts for the to-be-reported quarter, let us check the factors that are likely to have impacted BlackRock’s quarterly performance.Key Factors to Note & Q3 Estimates for BLKBlackRock is a dominant player in the exchange-traded fund (ETF) market, given its continued investments in the U.S. iShare core ETFs. Further, lower interest rates and expected economic slowdown are driving investors toward other investment options. Thus, these are likely to have resulted in solid AUM inflows for BLK during the third quarter. The Zacks Consensus Estimate for total AUM is pegged at $10.95 trillion, suggesting a year-over-year jump of 20.3%. Our estimate for AUM is $10.77 trillion.BlackRock is expected to have recorded an increase in its investment advisory, administration fees and securities-lending revenues on improving inflows. The consensus estimate for the metric stands at $4.06 billion, suggesting a 10.2% year-over-year rise. Our estimate for the same is pinned at $3.98 billion.The Zacks Consensus Estimate for investment advisory performance fees is pegged at $190 million, indicating substantial year-over-year growth. Our estimate for the same is $199.2 million.The consensus estimate for distribution fees of $326.3 million suggests a rise of 1.7%. We project the metric to be $334.1 million.The consensus estimate for technology services revenues is pegged at $412.4 million, implying a 1.3% year-over-year rise. We project the metric to increase to $415.8 million.The Zacks Consensus Estimate for advisory and other revenues is pegged at $55.2 million, which indicates a year-over-year jump of 28.4%. We project the metric to be $50 million.BlackRock’s expenses have been elevated over the past few years. Overall costs are expected to have increased in the third quarter, given that the company has been continuing its restructuring initiatives to modify the size and shape of its workforce and improve operating efficiency. Also, the company’s inorganic expansion efforts are likely to have led to an increase in expenses. Our estimate for total expenses is pinned at $3.19 billion, suggesting a year-over-year rise of 10.7%.What Our Model Unveils for BlackRockAccording to our quantitative model, the chances of BlackRock beating the Zacks Consensus Estimate for earnings this time are low. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Earnings ESP: The Earnings ESP for BlackRock is -0.85%.Zacks Rank: The company currently carries a Zacks Rank #3.The Zacks Consensus Estimate for third-quarter earnings of $10.17 has been revised almost 1% lower over the past seven days. The figure indicates a decline of 6.8% from the year-ago quarter’s reported number.The consensus estimate for sales is pegged at $5.04 billion, which suggests a rise of 11.6%.Stocks Worth a LookHere are a couple of finance stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model:JPMorgan JPM is scheduled to release quarterly earnings on Oct. 11. The company has a Zacks Rank #3 and an Earnings ESP of +0.54% at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Over the past 30 days, the Zacks Consensus Estimate for JPM’s quarterly earnings has moved marginally lower to $4.04.The Earnings ESP for PNC Financial PNC is +2.23% and it carries a Zacks Rank #3 at present. The company is slated to report quarterly results on Oct. 15.PNC’s quarterly earnings estimates have been revised 1.5% north to $3.26 over the past month.Infrastructure Stock Boom to Sweep AmericaA massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.The only question is “Will you get into the right stocks early when their growth potential is greatest?”Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How To Profit From Trillions On Spending For Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report BlackRock, Inc. (BLK): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks