Long-established in the Asset Management industry, Blackstone Inc (BX, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.1%, juxtaposed with a three-month change of 7.71%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Blackstone Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 3/10
- Profitability rank: 5/10
- Growth rank: 6/10
- GF Value rank: 1/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned Blackstone Inc the GF Score of 65 out of 100, which signals poor future outperformance potential.
Understanding Blackstone Inc's Business
Blackstone Inc, with a market cap of $83.60 billion and sales of $7.42 billion, is the world's largest alternative asset manager. As of June 2023, the company boasts $1.001 trillion in total assets under management, including $731.1 billion in fee-earning assets. Blackstone Inc operates across four core segments: private equity, real estate, credit & insurance, and hedge fund solutions. With a client base predominantly composed of institutional investors, the company also serves high-net-worth individuals through its 25 offices worldwide.
Financial Strength Breakdown
Blackstone Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's low cash-to-debt ratio at 0.23 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 9999, which is above Joel Tillinghast's warning level of 4 and is worse than 0% of 355 companies in the Asset Management industry. Tillinghast said in his book “Big Money Think's Small: Biases, Blind Spots, and Smarter Investing” that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Profitability Breakdown
Blackstone Inc's low Profitability rank can also raise warning signals. The company's Net Margin has declined over the past five years (-7.89%), with the following data: 2018: 26.60; 2019: 33.20; 2020: 19.98; 2021: 35.18; 2022: 24.50. This downward trend in profitability is a red flag for investors looking for stable or improving margins.
Next Steps
Considering Blackstone Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has a strong momentum rank, its low scores in other critical areas may overshadow this positive aspect. Investors should weigh these factors carefully when considering Blackstone Inc as part of their investment portfolio. For those seeking alternatives, GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
Will Blackstone Inc navigate through these financial challenges to maintain its industry-leading position, or will these warning signs lead to a period of underperformance? Only time will tell, but informed investors will keep a close eye on these developments.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
