Why is Earnings Beat Less Likely for Blackstone (BX) in Q4?

Blackstone BX is scheduled to report fourth-quarter and 2019 results on Jan 30, before the opening bell. Its revenues and earnings for the to-be-reported quarter are likely to have witnessed growth on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from growth in assets under management (AUM) and lower expenses. However, a decline in revenues acted as a headwind.

Blackstone does not have an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in only two of the trailing four quarters.

Blackstone Group Inc/The Price and EPS Surprise

Blackstone Group Inc/The price-eps-surprise | Blackstone Group Inc/The Quote

Moreover, activities of the company in the fourth quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for its earnings of 68 cents for the quarter has been unchanged over the past seven days. Nevertheless, the figure indicates a significant rise from the prior-year quarter’s reported number.

Also, the consensus estimate for sales of $1.60 billion suggests significant growth from the year-ago quarter’s reported figure.

Key Estimates for Q4

Driven by net inflows, Blackstone’s fee-earning AUM and total AUM have been witnessing consistent growth since the past few years. The same trend is likely to have continued in the to-be-reported quarter despite an overall challenging operating backdrop.

The Zacks Consensus Estimate for fee-earning AUM for the fourth quarter is pegged at $401 billion, which indicates 16.9% improvement from the prior-year quarter’s reported number. Also, the consensus estimate for total AUM of $563 billion suggests 19.3% growth year over year.

Net management and advisory fees (segment revenues) are expected to be $940 million, indicating growth of 17.8% from the year-ago quarter’s reported number.

Blackstone’s expenses have remained elevated over the past few years mainly because of higher general, administrative and other expenses. As the company continues to make investments in franchise, total expenses are expected to have remained elevated in the fourth quarter as well.

Here is what our quantitative model predicts:

According to our quantitative model, chances of Blackstone beating the Zacks Consensus Estimate in the fourth quarter are low. That is because it does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better, which is required to be confident of an earnings surprise call.

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 Blackstone is -1.71%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are some 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.

SEI Investments Company SEIC is slated to release results on Jan 29. It presently has an Earnings ESP of +2.35% and a Zacks Rank #1 (Strong Buy).

Prosperity Bancshares, Inc. PB is slated to release results on Jan 29. It currently has an Earnings ESP of +1.35% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Legg Mason, Inc. LM has an Earnings ESP of +1.59% and a Zacks Rank #2 (Buy) at present. The company is slated to release results on Jan 29.

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