Q1/2025 earnings start with BlackRock - Preview of the week starting 07Apr25

Public Holidays

The USA, China, Hong Kong & Singapore have no public holidays in the coming week.

Economic Calendar (07Apr25)

Economic Calendar for the week starting 07Apr25

Notable Highlights

• Consumer Price Index (CPI) should be the most watched macro data of the coming week. The Core Consumer Price Index (CPI) measures month-over-month inflation (excluding volatile food and energy prices). It’s a key indicator of underlying inflation trends. This represents the cost of living and will influence the Fed’s monetary policy decisions.

• The Producer Price Index (PPI) measures month-over-month changes in prices at the producer level, often a precursor to consumer inflation trends. The inflation that hits the producers would be passed onto the consumers. This can also be seen as one of the precursors for CPI.

• 10-Year Note Auction reflects the yield on the U.S. 10-year Treasury note auction, a measure of investor confidence in U.S. debt and economic outlook. If more investors turn to bonds like this, this implies cautionary sentiments in the market.

• The Federal Open Market Committee (FOMC) releases minutes from its prior meeting, providing insights into monetary policy decisions, interest rate expectations, and economic projections.

• Initial jobless claims will be announced. This weekly report tracks the number of new unemployment claims, serving as a leading indicator of labor market health. The Federal Reserve uses this as one of the key macro data references as it balances inflation and employment in the economy.

• Crude Oil Inventories can be seen as forward indicators of market demand and consumption. This event tracks the weekly change in U.S. crude oil inventories, an indicator of oil supply and demand, which can impact oil prices and energy markets. If the trend of excess inventories continues, demand erosion can lead to reduced production & weakened consumer spending.

Earnings Calendar (07Apr25)

Earnings for the week starting 07Apr25

I am interested in BlackRock, Delta, Morgan Stanley, JP Morgan, Wells Fargo, BNY and CarMax.

Let us look at BlackRock in detail.

BlackRock’s stock price has shown a downtrend in the last few months. The stock price grew 5.5% from a year ago. Technical Analysis has a “Strong Sell” rating. Analysts Sentiment has a price target of $1153.20. This implies a price upside of 40.19%.

Here is an analysis of BlackRock’s recent performance.

Revenue

• Growth Trend: BlackRock's revenue has shown consistent growth, increasing from $11.401 billion in 2015 to $20.407 billion in 2024. The 10-year compound annual growth rate (CAGR) for revenue is 6.3%, reflecting steady expansion.

• Key Milestones: Revenue growth was strong in early years (e.g., 7.5% in 2016, 11.5% in 2020), with a slight decline of -0.1% in 2023, followed by a recovery of 14.3% in 2024. The growth trajectory has been relatively stable.

• Competitive Advantage: The consistent revenue growth underscores BlackRock’s dominant position in asset management, driven by its extensive range of investment products and global reach, catering to institutional and retail clients.

Operating Profit

• Growth Trend: Operating profit grew from $4.664 billion in 2015 to $7.538 billion in 2024. The operating margin has remained robust, peaking at 40.9% in 2015 and stabilizing around 36.9% in 2024.

• Operating Margin: The operating margin averaged around 35-40% over the decade, with minor fluctuations, indicating strong cost management and profitability.

• Competitive Advantage: The high and stable operating margin reflects BlackRock’s efficient business model, leveraging its scale and technology (e.g., Aladdin platform) to maintain profitability in the competitive asset management industry.

Earnings Per Share (EPS)

• Growth Trend: EPS increased significantly from $19.71 in 2015 to $42.01 in 2024. The 10-year EPS growth has been impressive, with a CAGR of 8.2%, including notable jumps like 58.4% in 2017 and 20.0% in 2021.

• Volatility: EPS growth has been positive in most years, with a rare decline of -11.1% in 2022, followed by a strong recovery of 15.1% in 2024.

• Competitive Advantage: The consistent EPS growth highlights BlackRock’s ability to generate shareholder value, supported by its diversified revenue streams and strong market position.

Price-to-Earnings (P/E) Ratio

• Valuation: The P/E ratio stands at 21.6, suggesting that BlackRock is valued at a premium relative to its earnings, which is reasonable given its industry leadership and growth prospects.

• 10-Year Median Returns: The 10-year median return on assets (ROA) is 2.8%, return on equity (ROE) is 14.0%, and return on invested capital (ROIC) is 11.0%, indicating solid historical returns.

• Competitive Advantage: The moderate P/E ratio, combined with strong ROE and ROIC, reflects BlackRock’s ability to efficiently utilize capital and generate value, supported by its scale and innovative technology.

Free Cash Flow (FCF)

• Growth Trend: The EV/FCF ratio is 28.8, and the 10-year CAGR for FCF is not explicitly provided but implied to be positive given the 10-year median FCF margin of 22.5%. Free cash flow has supported dividend payments and growth initiatives.

• Capital Structure: The median debt/equity ratio is 0.2, and debt/assets is 0.0, indicating a very low leverage position.

• Competitive Advantage: Strong FCF generation and minimal debt provide BlackRock with financial flexibility to invest in technology, acquisitions, and shareholder returns, a key strength in the asset management sector.

Overall Assessment

Over the past 10 years, BlackRock has demonstrated robust growth and stability, with revenue increasing at a 6.3% CAGR and EPS growing at an 8.2% CAGR. Operating margins have remained strong (around 36-40%), and the company has consistently raised dividends (8.9% CAGR), reflecting financial health and a shareholder-friendly approach. The P/E ratio of 21.6 and strong ROE (14.0% median) suggest a premium but justified valuation, supported by its leadership in asset management.

The high FCF generation, minimal debt (debt/equity of 0.2), and high gross margin (50.0% median) underscore BlackRock’s competitive advantages, including its technological innovation (e.g., Aladdin) and global scale. Despite a slight revenue dip in 2023, the 2024 recovery indicates resilience in a dynamic market.

The forecast of BlackRock’s earnings is 10.87 and 5.42B for its EPS and revenue, respectively. Though the P/E ratio stands at an attractive 21.6, I prefer to monitor the stock for now.

Market Outlook of S&P500 - 07Apr25

S&P 500 chart as of 07Apr25

Observations:

• The MACD indicator has experienced a bottom crossover in a few days. This should form a “double bottom”. Typically, a “recovery” can happen after a double bottom.

• Moving Averages (MA). The MA50 line has started a downtrend, while the MA200 line is on an uptrend. This implies a downtrend in the mid-term and a bullish in the long term. We are seeing the setup of a Death Cross (when the MA50 line cuts the MA200 line from above). A death cross can be seen as a bearish indicator.

Death Cross Definition: How and When It Happens

• Candle. The last candle is below the MA50 and MA200 lines, implying a bearish outlook for the medium and long term.

• The three Exponential Moving Averages (EMA) lines are showing a downtrend.

• Chaikin’s Monetary Flow (CMF) is in the “downtrend zone” (below the 0 line).

• Let us monitor the magnitude of the rise and fall alongside the volume.

Based on the daily intervals, the technical indicators have a “Strong Sell” recommendation. There are 18 indicators showing a “Sell” rating versus 1 with a “Buy” rating. Here are the technical indicators and moving averages in summary.

The candlestick patterns suggest a “bearish” outlook in the coming weeks.

Given the above indicators and patterns, the S&P 500 is pointing to a “bearish” outlook.

News and my thoughts from last week (07 Apr 2025)

The China National Offshore Oil Corporation (CNOOC) has discovered an oilfield in the South China Sea with proven reserves exceeding 100 million tonnes, Xinhua news agency reported on Monday. - Reuters

PolyMarket’s bet on US recession in 2025

Is the US Big Tech BUBBLE popping? Magnificent 7 stocks have DROPPED 15% year-to-date. By comparison, the remaining 493 stocks have been flat. The Magnificent 7 has declined 20% since its December peak and has erased over $3 TRILLION in market value. - X user Global Markets Investor

US consumers say a RECESSION has arrived: The Consumer Confidence Index fell to the lowest in 4 YEARS. Expectations plunged to the lowest in 12 years. A reading below 80 signals a recession. Future employment prospects TUMBLED to a 12-year low. Americans' pessimism about stocks is SKYROCKETING: 44% of US consumers expect LOWER stock prices in the next 12 months, up from ~22% in December. This is now in line with the 2022 bear market PEAK. - X user Global Markets Investor

Hedge funds last week ditched tech stocks at the fastest pace in six months and at the highest levels in five years, according to Goldman Sachs, opens new tab, as world markets tumbled on worries over U.S. President Donald Trump's April 2 tariff deadline. - Reuters

The "Buy Canadian" movement is sending new ripples of concern through the executive offices of U.S.-based consumer companies that banked on selling their products on Canadian retail shelves. - Reuters

OPEN SOURCE AI IS WINNING — CLOSED MODELS CAN’T COMPETE Kai-Fu Lee — former Google China president and now head of AI venture firm Sinovation Ventures — says the future of AI belongs to open source, not closed systems like OpenAI or Anthropic. LEE: “It’s become clear that open source will be the winner. The issue really isn't whose model is 1% better is OpenAI's model even sustainable? OpenAI’s costs of $7M DeepSeek probably operated with 2% the operating expense. Here you have a competitor coming in with an open source model that's for free. Sam Altman is probably not sleeping well.” Source: Ai

Some of the best benefits from the digital age are open source, outsource and crowd source. We need transparency for accountability. When there is a lack of accountability, it can lead to abuse and fraud.

6.1 million Americans are behind on their mortgage. FHA delinquencies just hit 11.03% — the highest in years. - X user Michael Burry Stock Tracker

TRUMP: IF IRAN DOESN'T AGREE TO A DEAL, THERE WILL BE BOMBING "It will be bombing the likes of which they have never seen before." - CNBC

My Investing Muse (07 Apr 2025)

Layoffs & Closure news

• The Trump administration began mass layoffs of 10,000 staffers at US health agencies, including the Centers for Disease Control and Prevention, the FDA and the National Institutes of Health - Reuters

• Hooters restaurant chain files for bankruptcy - BBC

• British Steel announces it will close its two blast furnaces in Scunthorpe, ending all steel production in the UK after more than 150 years. The country that started the Industrial Revolution will no longer produce steel - X user Visegrad24

• On the Border has been struggling and filed for Chapter 11 bankruptcy on March 4. On that day, the chain began shutting down dozens of restaurants as it worked on a rescue plan. - The Street

The above are some of the layoff and closure news. Let us monitor this, as this can lead to market-wide concerns.

Tariffs News

Here is some news about the latest tariffs.

Can tariffs be the means to an end? The USA can be left in isolation. Wouldn't it be interesting for China, Canada, Mexico, and Europe to work together for trade? Remember to hedge. Will Trump adjust his stance on tariffs? Concerned that this can isolate America while the rest collaborate in trade and developments.

CHINA ANNOUNCES EXTRA 34% TARIFFS ON U.S. GOODS FROM APRIL 10

Stellantis temporarily halts some Canada and Mexico plants due to US auto tariffs, per Bloomberg.

“Respondents indicated that the twin threats of tariffs and continued inflation were significant contributors to their pessimistic predictions,” a Tuesday report stated. “The dip to 57.1 is not troubling in a vacuum; the major point of concern is that it represents a deviation from the direction in which the logistics industry had been trending since reaching a low point in July 2023.” - FreightWaves

In an “extreme” scenario, heightened taxes on U.S. imports could result in a 1.4 % to 2.2 % increase in core inflation. This assumes 60% tariff rates on Chinese imports and 10% tariff rates on imports from all other countries. - CNBC

For tariffs, let us monitor developments, not jump to a conclusion. We can expect some exchanges taking place, and this can take time before things are “carved into stone”.

My final thoughts

If the tariffs are not managed properly, China can and will end up building everything. They can partner with the rest of the world, including Canada, Europe, Mexico and more. Will America be left in isolation? It is better when countries work together. Coupled with an overvalued market, the recent decline is not solely driven by tariffs. Can this lead to a wider “crash”? It is possible.

Let us review our expenditures, income, and savings. Let us spend within our means, invest with what we can afford to lose, and avoid leverage. I am reviewing my holdings and plan to cut losses with businesses losing their competitive advantages. I would also consider hedging and adding some defensive positions.

Let us do our due diligence before we take up any positions. Let us have a successful week ahead.

@TigerStars

$BlackRock(BLK)$

$S&P 500(.SPX)$

$Cboe Volatility Index(VIX)$