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Robust AUM Balance Aids Blackstone (BX) Amid Cost Woes

Blackstone Inc. BX is well-poised to benefit from its strong fund-raising ability and revenue mix. Also, continued net inflows are likely to keep supporting the company’s assets under management ("AUM") growth.

However, elevated expenses are expected to hurt the company’s bottom line in the near term. Also, BX’s unsustainable capital deployment activities is a concern.

Looking at its financials, Blackstone's segment revenues witnessed a compound annual growth rate (CAGR) of 24.7% over the last five years (2018-2022). The rise was mainly driven by improving management and advisory fees and total investment income. Though segment revenues declined in the first quarter of 2023, growth in the same is expected in the upcoming quarters on the back of the promising performance of the company’s funds. Our estimates for total segment revenues indicate a CAGR of 11.2% by 2025.

Blackstone’s fee-earning AUM and total AUM consistently demonstrate strong growth, aided by increasing net inflows. Over the last five years (2018-2022), fee-earning AUM witnessed a CAGR of 20.3% and total AUM saw a CAGR of 19.9%. The company’s diverse products, revenue mix and superior position in the alternative investments space will likely continue to support AUM growth. Our estimates for fee-earning AUM and total AUM suggest a CAGR of 12.1% and 6.1%, respectively, over the next three years.


Despite a challenging fund-raising environment for asset managers, Blackstone has been successfully raising money. Fund raising for the global private equity and real estate funds resulted in the company’s ‘dry powder’ or the available capital of $193.9 billion as of Mar 31, 2023.

While, total consolidated expenses declined in 2022, the same increased and witnessing a CAGR of 7.8% over the four-year period ended 2022. The rise was mainly due to higher general, administrative and other expenses. Though expenses declined in the first quarter, the metric is expected to remain elevated in near term. We expect total consolidated expenses to rise 16.5%, 11.1% and 8.7% for 2023, 2024 and 2025, respectively.

Given the volatility in its quarterly earnings over the last several quarters, the dividend might not be dependable. Although it has a share repurchase plan in place, chances of Blackstone sustaining its current capital deployment activities are dim.

Analysts seem pessimistic regarding BX’s earnings growth prospects. The Zacks Consensus Estimate for the company's 2023 earnings has been revised 1% down in the past seven days. The company currently carries a Zacks Rank #3 (Hold).

In the past year, shares of BX have declined 24.6% compared with the industry's fall of 15%


Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research


Finance Stocks Worth a Look

A couple of better-ranked stocks from the finance space are Pathward Financial, Inc. CASH and First Citizens BancShares FCNCA.

The Zacks Consensus Estimate for Pathward Financial’s current fiscal year earnings has been revised 1.8% upward in the past 30 days. Its shares have gained 4.5% in the past six months. Currently, CASH carries a Zacks Rank #2 (Buy).

First Citizens BancShares currently sports a Zacks Rank #1 (Strong Buy). Its earnings estimates for 2023 have been revised 67% upward in the past 30 days. In the past six months, FCNCA’s shares have rallied 59.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Blackstone Inc. (BX) : Free Stock Analysis Report

First Citizens BancShares, Inc. (FCNCA) : Free Stock Analysis Report

Pathward Financial, Inc. (CASH) : Free Stock Analysis Report

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