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Shares of private equity firm Blackstone Group (NYSE: BX) surged 21% on Monday. The question is why?
Some have attributed the surge to investors buying on speculation of an upside surprise from Thursday's earnings report. Analysts surveyed by Thomson Reuters expect the New York-based company to report fiscal third quarter earnings of $0.09 per share, compared to a loss of $0.07 per share in the second quarter, but also a profit of $0.15 per share in the year-ago quarter. Revenue for the third quarter is expected to be 9.1% lower than a year ago to $341.9 million.
Blackstone's long-term EPS growth forecast is 12.7%, and its earnings multiple is 22x. This dividend-paying company reported more cash on hand than long-term debt in the previous quarter, and its cash flow from operations has increased in recent quarters even as it reported losses. But the First Call consensus recommendation remains to hold BX.
The interest in Blackstone may also be due in part to the recent news that rival private-equity firm KKR is lining up IPOs of some of its assets, including Dollar General. Blackstone and others are expected to follow suit due to the recent rise in equity markets.
Blackstone shares fluctuated around the $13 mark today. The share price is up 99% year to date, but still 27% lower than a year ago, and less than its $31 IPO price in June of 2007.
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