This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Investors, Don't Ignore Blackstone!

Stocks in this article: BX

NEW YORK ( TheStreet) -- Blackstone Group (BX) is knocking the ball out of the park, and investors should take notice.

This company invests on behalf of its investors and takes a large percentage of the profits if the investments pay off. It also receives fees on assets managed.

Even though it traded on Friday July 19 at a new 52-week high of $23.95, it still has a nice annual dividend yield. It did announce a reduction in its current quarterly dividend from 30 cents to 23 cents, but this may represent an attempt to reduce its payout ratio of 99%, which indicates the company may not need to leverage or borrow as much to pay a generous dividend.

In the most recent quarter ended June 30, the company sold $1.6 billion worth of equities in companies it owned. It also raised another $2.1 billion selling real estate that it had purchased when the bottom fell out of the market beginning in 2008.

In its conference call, BX management said it expected this exuberantly profitable environment for selling assets to carry forward for the foreseeable future. That's a key sign of a great money management firm. It knows when to sell as keenly as it knows when to buy.

Those who were prescient enough to buy shares of BX last fall when they were changing hands for around $13 are now up nearly 88% including dividends. Heck, if you bought shares on June 24 or 25 at around $20 a share, you're sitting on a stunning 19% profit.

By many metrics the shares are still cheap. With its latest quarterly EPS results of 36 cents per share, or $211 million, its shares are trading at a forward (one-year) price-to-earnings ratio of slightly more than 8.

BX's "economic net income" more than tripled from the same quarter last year to more than $703 million. This translates to a price-to-earnings-to-growth (PEG) ratio (five-year expected) of less than 0.70.

"Economic net income" is a financial metric used to calculate the net income of publicly traded private-equity firms and to measure the value of their investments. It takes into account both realized and unrealized gains. It even factors in accounting anomalies inherent to these kinds of companies.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,812.89 -2.05 -0.01%
S&P 500 2,070.38 +3.35 0.16%
NASDAQ 4,778.8560 +20.6040 0.43%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs