BlackRock Stock Topped The Earnings Consensus In Q2

BlackRock’s stock (NYSE: BLK) has gained 7% YTD as compared to the 19% rise in the S&P500 index over the same period. Further, at its current price of $757 per share, the stock is trading 6% below its fair value of $803 – Trefis’ estimate for BlackRock’s valuation. The company surpassed the consensus estimates of earnings in the second quarter of 2023, but revenues marginally missed expectations. It reported total revenues of $4.46 billion, which was 1% below the year-ago figure. The top line suffered due to a slight drop in the distribution fees and base fees (total investment advisory, administration fees & securities lending revenue). Notably, the average AuM was up by 2% y-o-y to $9.19 trillion and total net inflows were $80 billion in Q2. On the cost front, the operating expenses as a % of revenues witnessed a marginal increase. However, it was more than offset by an increase in non-operating income from -$347 million to $251 million. Overall, the adjusted net income improved by 27% y-o-y to $1.37 billion.

The total revenues decreased by 6% y-o-y to $8.7 billion in the first half of 2023. It was primarily driven by a 5% drop in the base fees, followed by a 14% decline in the distribution fees. On the flip side, the top line was somewhat supported by a 4% rise in technology service revenues. Further, the non-operating income increased from -$485 million to $367 million, offsetting the negative impact of lower revenues. It led to an adjusted net income of $2.52 billion – at par with the year-ago figure.