Tickers in this Article: BLK, BEN, TROW, LM, AMP
Asset management firm BlackRock (NYSE: BLK) reported first quarter earnings that fell 5 cents short of analyst estimates. More intriguing is the integration of its Barclays Global Investors (BGI) acquisition, which includes Barclays' exchange-traded funds.

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A Difficult Quarter To Measure
BlackRock earned $2.40 per share on an adjusted basis, compared to 81 cents per share in Q1 last year. Analyst expectations were $2.45 a share. Net income was $469 million compared to 110 million on an adjusted basis. This includes BGI, which makes realistic comparisons difficult.

Looking at BlackRock's earnings on a sequential quarter basis gives a better picture of the earnings change. The full effect of the BGI investment and the issuance of new BlackRock shares in December 2009 still can't be fully measured. Revenue did increase from $1.5 billion in Q4 to just under $2 billion in this year's Q1. Net income rose from $379 million in Q4 to the $469 already mentioned in Q1. The stock has a 52-week price range of $243 to $134 and recently traded at slightly over $190 a share with a 31.5 P/E ratio and a forward multiple of 15. Investors are trying to assess how the BGI acquisition ultimately will be digested.

BlackRock's World
BlackRock now has a $37 billion market cap, towering over many of its competitors. Franklin Resources (NYSE: BEN), which contains the Templeton funds, is humming along, trading at near a 52-week high. T Rowe Price (Nasdaq: TROW) just reported Q1 earnings of 57 cents per diluted share compared to last year's Q1 of 19 cents. It reported net inflows to its stock funds. Legg Mason (NYSE: LM) gave a preliminary report of $684.5 billion of assets under management as of March 31, which is an increase. Despite the surge of good news in the investment management business, Ameriprise Financial (NYSE: AMP) warned that retail investors are still risk averse. (For additional reading, see A Career In Endowment Management.)

Bigger, Better BlackRock?
BlackRock's quarterly year-over-year revenue doubled from last year's Q1, while its net income quadrupled. The company reported that many of its investors have moved from actively managed to passively managed funds. Net new business increased in fixed-income assets, as the company cited rebalancing of risk and shifting of allocations by clients. BlackRock said the integration of BGI is proceeding well and cited a healthy long-term pipeline overall.

For Investors To Consider
Since the stock market has rocketed upward from its March 2009 lows, BlackRock and the asset management industry are doing better. This does not mean that retail investors have returned en masse to mutual funds, though, or haven't been scarred by events. Think of the Ameriprise cautionary note, as well as BlackRock noting the risk aversion and asset shifting still going on. Yet it says something about the resiliency of BlackRock and other investment management firms, if not retail investors, that investment activity is as vigorous as it is, given the historic economic and market decimation of a couple of years ago.

BlackRock's stock is positioned at a fairly attractive price due to investor caution on its BGI segment. The BGI segment, though, looks good so far and should continue to perform well, and though many investors are not interested in firms that invest, BlackRock is a stock that is verging on a bargain price. Better yet, a market correction can give buyers an even better price. (For additional investment ideas, check out 7 Dividend Stocks Analysts Love.)

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