How Will BlackRock (BLK) Stock Respond To ETFs Losing Market Share to Vanguard Group?

NEW YORK (TheStreet) -- Shares of BlackRock, Inc. (BLK) are slightly lower in pre-market trade after it was reported that as the firm is set to amass $1 trillion in exchange-traded fund assets in its iShares business, U.S. retail investors increasingly prefer to send their money to low-cost leader Vanguard Group, highlighting a weak spot for the world's biggest money manager, according to Reuters.

With $998 billion in ETF money, BlackRock has more than the next contenders, Vanguard and State Street Corp. (STT) combined. But the company has struggled to compete with Vanguard, known for its investor-friendly low-cost investing, for Mom and Pop's nest eggs, Reuters said.

Retail investors now account for more than half of the $1.8 trillion in ETF assets under management in the U.S, according to consulting firm PwC.

Must Read: Warren Buffett's 25 Favorite Growth Stocks

 

TheStreet Ratings team rates BLACKROCK INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate BLACKROCK INC (BLK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 9.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • BLACKROCK INC has improved earnings per share by 21.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BLACKROCK INC increased its bottom line by earning $16.88 versus $13.80 in the prior year. This year, the market expects an improvement in earnings ($18.50 versus $16.88).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income increased by 19.6% when compared to the same quarter one year prior, going from $632.00 million to $756.00 million.
  • 42.10% is the gross profit margin for BLACKROCK INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.31% significantly outperformed against the industry average.
  • You can view the full analysis from the report here: BLK Ratings Report

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