Zacks_Analysts' Blog : Blackstone Ahead of Estimates - Analyst Blog

Blackstone Group’s (BX) first-quarter 2011 economic net income (ENI) of 51 cents per share outpaced the Zacks Consensus Estimate of 41 cents. It also surpassed the prior-year quarter’s ENI of 32 cents.

ENI came in at $568.1 million for the reported quarter compared with $360.4 million in the year-ago quarter. The increase was primarily driven by improved performance in all the segments.

The better-than-expected results were mostly aided by strong revenue growth, improved equity markets and lower operating expenses.

Quarter in Detail

Blackstone’s total revenue in the quarter was $1.2 billion, up 64.5% from $701.2 million in the prior-year quarter. The surge was attributable to higher performance fees and management fees. Total revenue also exceeded the Zacks Consensus Estimate of $1.1 billion.

Total expenses declined 10.0% year over year to $990.9 million in the reported quarter. The decrease reflects a significant fall in employee compensation and benefit expenses, which was partially offset by a rise in general and administration expenses, fund expenses and interest expenses.

Asset Position

Fee-earnings assets under management totaled $124.03 billion as of March 31, 2011, up 26% year over year. As of March 31, 2011, total assets under management were $150.0 billion, up 43% from $104.5 billion as of March 31, 2010.

Capital

As of March 31, 2011, Blackstone had $455.8 million in cash. The company had invested $976.1 million in Blackstone’s Treasury cash management strategies, $254.0 million in liquid Blackstone funds and $1.7 billion in illiquid Blackstone funds.

Blackstone funds had $31.8 billion of committed but uninvested capital at the end of March 31, 2011.

Dividend Update

Concurrent with the earnings release, Blackstone declared a quarterly distribution of 10 cents per unit to record holders of common units as of the close of business on May 16, 2011. This distribution will be paid on May 31, 2011.

Our Viewpoint

Though there are concerns related to the sluggish economic recovery, Blackstone will continue to benefit from the growing need for risk management and alternative investment solutions within the financial industry.

Blackstone’s close competitor – Calamos Asset Management Inc. (CLMS) is scheduled to report its first quarter 2011 earnings on April 28, 2011.

Currently, Blackstone retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.