As stocks and other financial assets climb, investment management firms are back to making big bucks. BlackRock, Inc. (BLK) is giving back the cash to shareholders as it recently announced it was increasing its dividend by 37.5%. This Zacks #1 Rank (strong buy) trades at just 14.8x forward estimates.
BlackRock is a global investment management firm with assets under management (AUM), as of Dec 31, 2010, of $3.6 trillion. It offers mutual funds, the iShares ETFs and other pooled investment vehicles.
The company also offers risk management and advisory services to institutional investors through BlackRock Solutions headquartered in New York.
Raised the Dividend
On Feb 24, BlackRock raised its dividend by 37.5 cents to $1.375 per share, an increase of 37.5% from the prior quarter.
It was payable as of Mar 23 for shareholders of record at the close on Mar 7.
The dividend currently yields 2.9% which is much higher than some of its peers such as Franklin Resources (BEN) which pays a yield of just 0.8%.
BlackRock Beat for the 3rd Quarter in a Row
On Jan 25, BlackRock reported fourth quarter results which surprised on the Zacks Consensus by 17.9%. Earnings per share were $3.42 compared to the Zacks consensus of $2.90. It made just $2.39 in the fourth quarter of 2009.
AUM rose 6% to $3.6 trillion from $3.3 trillion in the year ago quarter.
On Dec 1, 2009, BlackRock acquired Barclay’s, which included the iShares business. It has been handling merger related outflows since.
The increase in the AUM for the year was driven from market and investment performance as well as $57.8 billion in net new business but merger-related outflows totaled $121 billion. The company believes the merger-related outflows are mostly behind it, leaving only some continuing technology implementation and organizational integration.
Investors Came Back
In the fourth quarter, investors poured money into long-term products, pushing up net new business by $28.2 billion. Most of that went into equity and multi-asset class products. Fixed income business rose $9.4 billion.
Index offerings, both through iShares and institutional accounts, brought in $13.4 billion and $12 billion, of net inflows respectively.
Risk was seen differently around the globe as flows in EMEA and Asia-Pacific were primarily in fixed income products but investors in the Americas charged into equities and multi-asset class offerings.
Zacks Consensus Estimates Rise
Even though the company reported fourth quarter results nearly 2 months ago, the 2011 Zacks Consensus Estimate continues to rise.
1 analyst revised the 2011 estimate higher in just the last 7 days, pushing the 2011 consensus up by 2 cents to $12.47 per share.
This is earnings growth of 14% over the $10.94 earned in 2009.
Similarly, the 2012 Zacks Consensus Estimate has also moved higher by 2 cents to $14.34 per share but that was within the last month. Analysts expect another 15% earnings growth in 2012.
BlackRock is expected to report first quarter 2011 results on Apr 25.
BlackRock Is a Value Stock
In addition to a P/E ratio under 15, which is my cut-off for a “value” stock, BlackRock also has a price-to-book ratio of 1.4. That is well below the P/B cut-off used for value stocks of 3.0.
It is also below some of its peers, as Franklin Resources, for example, has a P/B ratio, of 3.2.
Shares Near 3-Year High
While shares have rallied off the March 2009 lows and are near 3-year highs, they have yet to recoup the 2007 pre-recession highs.
Check out the 5-year chart.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
BLACKROCK INC (BLK): Free Stock Analysis Report
Zacks Investment Research
