News

This morning, second quarter reports from BlackRock BLK and Goldman Sachs GS provided insight into the prominent investment management banks with both appearing to benefit from easing inflation.

Let’s review BlackRock and Goldman's Q2 results and see if now is a good time to buy stock in these finance titans.

BlackRock Q2 Review

In what BlackRock stated was one of its strongest performances and highest quarterly growth rates since the pandemic, the company expanded its margin by 160 basis points during Q2.

BlackRock brought in $80 billion in new assets and generated 3% annualized organic base fee growth which was the highest mark during Q2 in three years. Overall, BlackRock ended the quarter with record AUM (Assets Under Management) of over $10.6 trillion.

Operating income of $1.9 billion and EPS of $10.36 spiked 12% respectively with Q2 sales of $4.8 billion expanding 8%. This was attributed to the positive organic base fee growth and the impact of market movement on average AUM. BlackRock’s top and bottom line figures for Q2 registered a surprise of -1% and 4% respectively.

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Goldman Sachs Q2 Review

Goldman Sachs was able to beat both its top and bottom line expectations by 1% with Q2 EPS of $8.62 and sales of $12.73 billion. Year over year, Q2 earnings soared 180% from $3.08 a share in the comparative quarter. Quarterly sales increased 17% while total operating expenses were nicely down to $8.53 billion which fueled Goldman’s increased profitability.

Notably, Goldman’s AUM increased by $86 billion and is also sitting at record levels of $2.93 trillion. Goldman also ranked as the worldwide leader in announced and completed mergers so far this year seeing strength in its Global Banking and Asset & Wealth Management segments.

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Recent Performance & Valuation Comparison

Year to date, Goldman’s stock has soared +50% to impressively top the S&P 500’s +25% while BlackRock’s +13% has lagged the broader market.

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Still, BlackRock's stock trades at 20X forward earnings with Goldman at 13.2X, offering nice discounts to the S&P 500’s 23.6X.

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Bottom Line

Blackrock and Goldman Sachs’ stock currently land a Zacks Rank #3 (Hold). To that point, more upside in these investment management leaders may depend on the trend of earnings estimate revisions following their Q2 results but they remain viable long-term investments, especially with record assets under management.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.