Is BlackRock Still a Good Bet as Its Fed Influence Grows in 2025?

Thinking about what to do with your BlackRock shares, or whether to jump in for the first time? You are not alone. Over the past year, BlackRock has delivered a jaw-dropping 29.4% return, and looking even further back, the stock is up 93.1% over three years and a remarkable 127.5% in five. After a soft patch in the past month, losing 3.2%, the stock rebounded 2.2% this past week. Year-to-date, it remains firmly positive at 10.4%. Clearly, something is working for this asset management giant, even as the company navigates headlines about its rising influence in Washington. BlackRock's own Rick Rieder is reportedly among the top contenders to succeed Jerome Powell as Fed Chair. On the international front, BlackRock continues to expand its global influence, from advising Saudi Aramco’s mega-infrastructure deals to navigating changing technology policies in China.

But here is the big question: are BlackRock shares actually undervalued at this price? Our valuation score, which gives the company a point for each of six checks where it is considered undervalued, currently sits at just 1 out of 6. That means only one traditional metric is flashing "cheap" right now. Do not let that number throw you, though; there are other ways to look at value, and not all great buys look textbook on paper.

Next, let us break down these valuation checks and why most are not giving the green light, before turning to a smarter, more nuanced way to judge what BlackRock is really worth.

BlackRock scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: BlackRock Excess Returns Analysis

The Excess Returns model evaluates whether BlackRock creates value above the basic required return by comparing the annual profit the firm can reliably generate against the cost of equity for shareholders. This method focuses on how effectively BlackRock invests shareholder money and grows profits, rather than just headline earnings or cash flow.

For BlackRock, the key figures are:

• Book Value: $317.55 per share
• Stable EPS: $47.22 per share (Source: Weighted future Return on Equity estimates from 5 analysts.)
• Cost of Equity: $24.51 per share
• Excess Return: $22.71 per share
• Average Return on Equity: 15.94%
• Stable Book Value: $296.30 per share (Source: Weighted future Book Value estimates from 3 analysts.)

This approach calculates whether BlackRock consistently earns returns above its equity cost. While the company posts solid excess returns and steady profitability, the model’s latest estimate suggests BlackRock’s intrinsic value is $733.93 per share. Since the current stock price trades roughly 53.1% above this level, BlackRock is considered significantly overvalued by this measure.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for BlackRock.

Our Excess Returns analysis suggests BlackRock may be overvalued by 53.1%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: BlackRock Price vs Earnings

The price-to-earnings (PE) ratio is the preferred metric for valuing established, profitable companies like BlackRock. It shows how much investors are willing to pay for each dollar of earnings. A high PE ratio can be justified if investors expect above-average growth or see less risk in the company’s future earnings. In contrast, a lower PE might reflect uncertainty or slower expected growth.

BlackRock currently trades at a PE ratio of 27.2x. For context, this is in line with the average for its Capital Markets industry, also at 27.2x, but well below the peer average of 59.4x. That suggests investors are not pricing in as much earnings growth or momentum as some of BlackRock’s peers.

Simply Wall St’s proprietary Fair Ratio model provides an even clearer picture. The Fair Ratio for BlackRock, which considers specifics such as its projected earnings growth, industry norms, profit margins, market capitalization, and unique risk profile, sits at 19.4x. This approach is preferable to relying only on industry averages or peer multiples because it takes into account the nuances that can affect a company’s true worth relative to its earnings.

Comparing BlackRock’s actual PE to its Fair Ratio, the stock appears to be valued noticeably higher than what would be considered reasonable based on its underlying fundamentals.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your BlackRock Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is a clear, simple story you build about a company that combines your perspective about its business prospects with financial forecasts like future revenue, earnings, and profit margins. This ultimately connects the company's journey to its fair value.

Instead of relying solely on historical ratios, Narratives allow you to connect why you believe a company will perform a certain way and see what that means for its valuation, all in one place. On Simply Wall St’s Community page, millions of investors create these Narratives by outlining what they think will drive a stock’s future, inputting estimates, and quickly comparing their calculated Fair Value to the current Price to spot opportunities or risks to buy or sell.

Narratives are dynamic, updating automatically when new earnings and news emerge, so you always have the most up-to-date perspective. For example, recent BlackRock Narratives range from one investor who sees strong future prospects and assigns a fair value as high as $1,252 per share to another who is more cautious with a $1,000 target. This powerful tool is designed to make sophisticated decision-making easy and accessible to everyone.

Do you think there's more to the story for BlackRock? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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