Long-established in the Asset Management industry, Blackstone Inc (BX, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.89%, juxtaposed with a three-month change of 42.65%. 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: 4/10
- Profitability rank: 5/10
- Growth rank: 2/10
- GF Value rank: 1/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned Blackstone Inc the GF Score of 59 out of 100, which signals poor future outperformance potential.
Understanding Blackstone Inc's Business
Blackstone Inc, with a market cap of $96.04 billion and sales of $7.01 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 business segments: private equity, real estate, credit & insurance, and hedge fund solutions. Catering primarily to institutional investors, which comprise 87% of its AUM, Blackstone Inc also serves high-net-worth clients. The company's global presence is marked by 25 offices across the Americas, Europe, the Middle East, and the Asia-Pacific region.
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 0.24 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 357 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, with figures showing a decrease from 33.20% in 2019 to 19.85% in 2023. This downward trend in profitability is a red flag for investors looking for stable and growing earnings.
Growth Prospects
The company's low Growth rank is indicative of a lack of significant growth, which is a concern for investors seeking long-term value appreciation. Additionally, Blackstone Inc's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering Blackstone Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and may want to look for companies with stronger GF Scores. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
As value investors, it's crucial to assess not just the historical performance but also the forward-looking indicators that may impact a company's ability to sustain its success. With Blackstone Inc's current GF Score, is it time to re-evaluate your investment thesis? Or will the company's strategic initiatives and market position enable it to overcome these challenges?
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.
