Is Blackstone a Buy After Its Latest Earnings Report?

Blackstone, a dominant player in the alternative asset management sector, experienced mixed results in its third quarter earnings report. While its assets under management (AUM) increased by 10% to nearly $1.4 trillion, distributable earnings per share fell by 13% to $1.52. This discrepancy in earnings growth highlights the company's lumpiness as a business, with strong fee-related earnings but a 34% decline in net realizations due to lower performance revenues from private equity and real estate investments.

Despite these fluctuations, Blackstone anticipates a significant increase in net realizations in the fourth quarter, driven by the sales of multiple companies. CFO Michael Chea expressed optimism, stating that the firm's underlying earnings power is expanding substantially, with an expectation of an outstanding 2027. The company's stock price dropped 28.5% from its 52-week high following the earnings report.

However, Blackstone's distributable earnings per share over the last 12 months are $5.95, trading at less than 20 times earnings, which could be considered a reasonable price for a leading asset manager. The company's long-term growth drivers, including its AI investment strategy and expansion of private wealth and private credit platforms, present compelling reasons to consider Blackstone as a buy for long-term investors.

While there are potential downside risks such as the success of its AI infrastructure and private credit expansion, if Blackstone's historical performance continues, it is projected to generate significant value for shareholders in the coming years.