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BlackRock's Stock Price Surges on Strong Q3 Earnings

By Dave Kovaleski – Updated Oct 13, 2020 at 11:48AM

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The asset manager saw earnings increase 24% in the quarter

Asset management firm BlackRock (BLK -1.03%) saw its stock price surge over 4% in early trading Tuesday following the company's strong third-quarter earnings report.

The world's largest asset manager saw a 11.4% increase in revenue to $11.7 billion year over year, while net income climbed 9.3% to $3.5 billion. Assets under management jumped 12% to $7.8 trillion year over year. That figure was buoyed by net inflows of $129 billion, led by $41.3 billion of inflows into its iShares exchange-traded funds (ETFs). Fixed income ETFs had $19.7 billion of inflows, while equity ETFs had $14.8 billion.

Active beat passive for BlackRock's institutional inflows. Its active institutional funds had $29 billion in net inflows compared to $7 billion for institutional index funds. Institutional equity-index funds saw $23.7 billion in net outflows, but that was offset by $30.3 billion in institutional fixed-income inflows.

The inflows drove about a $245 million increase (or 10%) in investment advisory, administration fees, and securities lending fees.

"Our diverse platform saw inflows across all asset classes, investment styles and regions. Notably, more than 50% of long-term flows were driven by clients in Europe and Asia," BlackRock CEO Laurence Fink said.

Also, performance fees, which are fees for generating a positive return, were way up from $121 million to $532 million.

Operating expenses jumped 18% year over year to $2.6 billion in the quarter from higher incentive compensation associated with higher performance and product launch costs. Overall, the operating margin was 40.2%, down slightly from 40.7% from a year ago. The diluted earnings per share increased 24% year over year to $0.87 per share.

BlackRock's stock is up about 26% this year.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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