BLK - Embedded Expectations Analysis - 2020 08 31
BlackRock, Inc. (BLK:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with an 18.8x Uniform P/E, implying bearish expectations for the firm. However, given management's confidence about iShares' outlook, Aladdin, and franchise performance, market expectations are overly bearish, suggesting upside remains warranted for BLK going forwardSpecifically, management is confident that they have never been better positioned to meet the need for differentiated and sustainable alpha in their portfolios, that active equity net inflows were driven by their top-performing franchises, and in their ability to increase liquidity in the current environment. In addition, they are confident that fixed income ETFs can double in the next five years with iShares leading the market, that they are focused on investing in sustainable assets, and in the long-term growth of both iShares and the ETF industry. Moreover, management is confident that their global allocation franchise is now at the top of its peer group and that Aladdin is addressing the need of better data and technology for the asset management value chain and for the focus on climate risk
BlackRock is an investment management firm. The company provides a range of investment and technology services to institutional and retail clients worldwide. Products are provided directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares? exchange-traded funds, separate accounts, collective investment trusts and other pooled investment vehicles. The company also provides technology services, including the investment and risk management technology platform, Aladdin?, Aladdin Wealth, eFront, Cachematrix and FutureAdvisor, as well as advisory services and solutions to a base of institutional and wealth management clients.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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