With over $3.8 trillion in assets under management, BlackRock, Inc. (NYSE:BLK) is one of the largest investment management companies in the United States. BlackRock, Inc. (NYSE:BLK) has grown its earnings nicely, and shareholders have profited nicely as a result. In fact, over the past decade, shares are up from $39.58 in 2003 to the current level of around $235, a gain of almost 600% in 10 years! With the state of certain other financial stocks these days, this is no small accomplishment (how much was Citigroup Inc. (NYSE:C) worth 10 years ago?) Even with these gains, most analysts feel that there is more upside ahead. Should BlackRock, Inc. (NYSE:BLK) investors hold for the next leg up, or should they go ahead and take their profits now?
BlackRock, Inc. (NYSE:BLK) offers a diverse line of both fixed-income and equity-oriented funds, as well as smaller lines of alternative investment products and cash management services. Fixed-income and Equity funds account for 82% of BlackRock, Inc. (NYSE:BLK)’s assets under management, and cash-management services such as money market funds make up an additional 7%.
BlackRock, Inc. (NYSE:BLK) has tremendously grown its product line and geographical reach through acquisitions, most notably the acquisition of Merrill Lynch Investment Management in 2006. Even though this happened some time ago, it still has significance today. The deal gave Merrill Lynch a 49% stake in BlackRock, Inc. (NYSE:BLK), which passed to Bank of America Corp (NYSE:BAC) with the 2008 purchase of Merrill Lynch. Over the next few years, Bank of America sold its stake, first in open market sales, then they sold the last 13.6 million shares directly to BlackRock in May 2011 for $187.65 per share.
So, BlackRock owns Merrill Lynch’s investment management business and bought 7% of its outstanding shares back at a discount (today shares are worth 32.3% more).
BlackRock, Inc. (NYSE:BLK) is also a good dividend payer, currently with an annual dividend of $6.72 per share, or 2.84%. The company has an excellent record of raising the dividend, and they have done so very consistently over the past decade.
As far as valuation goes, I think BlackRock is pretty attractive at 15.4 times forward earnings, which are projected by consensus estimates to grow by 12.6% and 15.5% over the next two years.
For comparison purposes, T. Rowe Price Group, Inc. (NASDAQ:TROW) is pretty close to BlackRock, in terms of product offerings, so let’s take a look.