Blackstone shares fell by -1.1% during the day's overnight session, and are now trading at a price of $112.57. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
The Market May Be Overvaluing Blackstone's Earnings and Assets:
Blackstone Inc. is an alternative asset management firm specializing in real estate, private equity, hedge fund solutions, credit, secondary funds of funds, public debt and equity and multi-asset class strategies. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 12.38 and an average price to book (P/B) ratio of 1.58. In contrast, Blackstone has a trailing 12 month P/E ratio of 47.1 and a P/B ratio of 11.34.
Blackstone's PEG ratio is 2.97, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $6,833 | $7,338 | $6,102 | $22,577 | $8,518 | $8,442 |
| Revenue Growth | n/a | 7.39% | -16.85% | 270.0% | -62.27% | -0.89% |
| Interest Income (MM) | $192 | $444 | $166 | $459 | $317 | $423 |
| Operating Margins | 51% | 52% | 43% | 60% | 41% | 40% |
| Net Margins | 48% | 53% | 37% | 55% | 35% | 36% |
| Net Income (MM) | $3,264 | $3,866 | $2,262 | $12,375 | $2,989 | $3,078 |
| Depreciation & Amort. (MM) | $59 | $71 | $71 | $75 | $69 | $69 |
| Earnings Per Share | $2.26 | $3.03 | $1.5 | $8.13 | $2.36 | $2.37 |
| EPS Growth | n/a | 34.07% | -50.5% | 442.0% | -70.97% | 0.42% |
| Diluted Shares (MM) | 1,207 | 676 | 697 | 720 | 741 | 819 |
| Free Cash Flow (MM) | $27 | $1,903 | $1,824 | $3,922 | $6,101 | $3,635 |
| Capital Expenditures (MM) | $18 | $60 | $112 | $64 | $235 | $242 |
| Long Term Debt (MM) | $15,171 | $0 | $0 | $0 | $0 | $0 |
Blackstone has growing revenues and increasing reinvestment in the business, low leverage, and decent operating margins with a stable trend. However, the firm has EPS growth achieved by reducing the number of outstanding shares. Finally, we note that Blackstone has irregular cash flows.
