BlackRock, Inc. (ticker: BLK) continued the mixed earnings season for the financial sectoron Monday when the company reported second-quarter earnings and revenue that came up short of Wall Street’s expectations.
Even with the stock market near all-time highs and the U.S. economy at its strongest point since the 2008 recession, BlackRock management said investors are still hesitant to go all-in with their cash.
BlackRock reported second-quarter earnings per share of $5.24 on revenue of $2.96 billion. Both numbers fell short of consensus analyst estimates of $5.40 and $3.02 billion, respectively. Advisory and administration fees and lending revenue of $2.67 also come up short of consensus estimates of $2.7 billion.
On the positive side, assets under management of $5.69 trillion and net inflows of $104 billion both topped expectations. BlackRock also reported record inflows of $74 billion into its iShares exchange-traded funds business.
“While significant cash remains on the sidelines, investors have begun to put more of their assets to work,” CEO Larry Fink says. “I have never seen more opportunity than I do today for BlackRock to help investors achieve their financial goals.”
BlackRock shares dipped 3 percent on Monday, following the trend of other high-profile financial stocks that reacted negatively to second-quarter earnings. On Friday, shares of JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Wells Fargo & Co. (WFC) all initially traded lower following mixed earnings reports. Overall, weak trading revenue was one of the major concerns for investors.
BlackRock is pushing to become a leader in the next generation of active investing by prioritizing the use of stock-picking algorithms rather than human traders.
“We are reorienting some of the humans’ jobs in terms of doing more data science and data analytics,” Fink said earlier this year.
Active managers have hit a rough patch in recent years. Roughly two-thirds of active fund managers under-performed the Standard and Poor’s 500 index in 2016, according to S&P Dow Jones Indices. The same study revealed…
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