BlackRock: Higher AUM, Lower Taxes, and Reduced Share Count Drive Earnings Growth

BlackRock, the world's largest asset manager, is poised for earnings growth, driven by higher assets under management (AUM), lower taxes, and a reduced share count, according to Morgan Stanley. This article explores these factors and their impact on BlackRock's financial performance.

BlackRock's AUM has grown significantly over the years, reaching a record $10.65 trillion in the second quarter of 2024. This growth is attributed to rising client asset values and increased inflows into the company's exchange-traded funds (ETFs). The company's diversified investment strategies and global presence have enabled it to attract and retain clients, contributing to its AUM growth.

The increase in AUM has positively impacted BlackRock's earnings growth. Higher AUM translates to increased investment advisory and administration fees, which are a significant source of revenue for the company. As AUM grows, so does BlackRock's revenue, leading to improved earnings.

Lower taxes have also contributed to BlackRock's earnings growth. The company has benefited from tax reforms and reduced tax rates, which have positively impacted its net income. In 2024, BlackRock's effective tax rate was 21.3%, compared to 24.6% in 2019, reflecting the impact of tax reforms.

The reduction in share count has further boosted BlackRock's earnings per share (EPS). The company has been actively repurchasing shares, reducing the number of outstanding shares and increasing EPS. In 2024, BlackRock's share count was 1.5 billion, down from 1.6 billion in 2019.

The combination of higher AUM, lower taxes, and reduced share count has positioned BlackRock for strong earnings growth. The company's ability to manage and grow its AUM, coupled with its strategic initiatives, has solidified its competitive position in the asset management industry.

In conclusion, BlackRock's earnings growth is driven by higher AUM, lower taxes, and reduced share count. These factors, along with the company's diversified investment strategies and global presence, have contributed to its strong financial performance. As BlackRock continues to grow and adapt to changing market conditions, it is well-positioned to maintain its leadership in the asset management industry.