Does Blackstone’s 19.6% Drop Signal a Potential Opportunity After Recent Investment News?

• Ever wondered if Blackstone is a hidden gem or overhyped in today’s market? Let’s break down what recent trends can tell us about its value right now.
• Despite a 68.9% gain over the past three years and total returns of 186.6% over five years, Blackstone shares have dropped 3.1% in the last week and sit 19.6% below their price from a year ago.
• Analysts and investors have been reacting to headlines around shifting interest rates, the firm’s activity in alternative assets, and broader market volatility. These factors have influenced Blackstone’s recent stock swings. News about the company's latest investments and partnerships has also kept it in the spotlight, hinting at both new opportunities and ongoing risks in this environment.
• On valuation, Blackstone scores just 1 out of 6 on our undervaluation checks, so there’s more to unpack when deciding if the current price is attractive. We’ll walk through the standard ways investors assess value, and highlight a smarter approach at the end of this article.

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

Approach 1: Blackstone Excess Returns Analysis

The Excess Returns valuation model takes a close look at how effectively a company turns its book value into profits above the cost of equity. Instead of simply projecting future cash flows, this approach examines Blackstone’s ability to consistently generate high returns on its invested capital compared to its capital costs.

For Blackstone, the numbers are impressive on their own. Book Value stands at $10.72 per share, with a Stable Earnings Per Share (EPS) of $2.80, based on consensus forecasts from six analysts. The cost of equity comes in at $0.50 per share, meaning Blackstone is estimated to deliver an excess return of $2.30 per share. The average Return on Equity for the firm is a robust 46.20%. Stable Book Value projections, sourced from two analysts, indicate this at $6.07 per share in the future.

Despite the company’s strong return metrics, the Excess Returns model suggests the intrinsic value of Blackstone shares is currently much lower than the market price. The implied discount indicates the stock is 173.2% overvalued using this method.

Result: OVERVALUED

Our Excess Returns analysis suggests Blackstone may be overvalued by 173.2%. Discover 885 undervalued stocks or create your own screener to find better value opportunities.

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

Approach 2: Blackstone Price vs Earnings

The Price-to-Earnings (PE) ratio is a classic valuation tool for profitable companies like Blackstone. It compares a company's current share price to its per-share earnings. This measure helps investors understand how much the market is willing to pay for each dollar of Blackstone’s earnings, making it especially useful for gauging value in consistently profitable firms.

What counts as a "normal" or "fair" PE ratio isn't fixed. Higher ratios are often justified for faster-growing companies or those with lower risk profiles, as investors are willing to pay a premium for growth and stability. Conversely, lower PE multiples might reflect slower growth, higher risk, or weaker profit prospects. Industry norms and the valuation of close peers offer a quick sense check, but they do not always paint the full picture.

Blackstone currently trades at a PE ratio of 40.9x, which stands above both the Capital Markets industry average of 24.6x and the peer group average of 35.2x. To get a more tailored sense of "fair" value, Simply Wall St introduces the Fair Ratio, a proprietary benchmark that accounts for Blackstone's growth, profit margin, risk factors, industry, and size. Unlike simple peer or industry comparisons, the Fair Ratio (25.5x for Blackstone) provides a smarter, more nuanced target that adapts to the company’s specific fundamentals.

With Blackstone’s PE ratio of 40.9x sitting well above its Fair Ratio of 25.5x, the current stock price appears costly given its outlook and risk profile.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1411 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Blackstone Narrative

Earlier we mentioned there's an even better way to understand valuation, so let's introduce you to Narratives, a more powerful approach that puts your perspective at the center of your investment decisions. A Narrative goes beyond the numbers, letting you create a story for Blackstone that reflects your outlook on its business, future revenue, earnings, and margins. Narratives link this story directly to your own financial forecast, translating your view into a Fair Value estimate tailored to how you see the company and the market.

On Simply Wall St’s Community page (used by millions of investors), Narratives make this process simple, accessible, and interactive. They help highlight the difference between the current Price and your Fair Value, and they update automatically as new news or earnings are released, keeping your outlook relevant. For example, you might believe Blackstone's long-term innovation justifies a Fair Value near $193 per share, while another investor focuses on operational risks and sees only $124. Both perspectives can co-exist as Narratives, dynamically tracking each user's evolving outlook.

For Blackstone, however, we'll make it really easy for you with previews of two leading Blackstone Narratives:

🐂 Blackstone Bull Case

Fair Value: $179.78

Current Discount: 21.3%

Expected Revenue Growth: 19.7%

• Analysts see long-term resilience for Blackstone, driven by high inflows and substantial capital reserves positioned for deployment into undervalued opportunities.
• Strategic alliances with large asset managers and strong innovation in private credit and wealth management are expected to boost revenue and margins.
• Analyst consensus targets indicate the current share price is close to fair value. Ongoing geopolitical and market risks could introduce volatility.

🐻 Blackstone Bear Case

Fair Value: $124.55

Current Premium: 13.6%

Expected Revenue Growth: 15.9%

• Rapid expansion in infrastructure and private wealth could create operational inefficiencies, potentially impacting Blackstone’s future earnings and net margins.
• Heavy reliance on large-scale capital deployments and industry shifts may reduce advantageous opportunities, hindering long-term revenue growth.
• Bearish analyst cohort sees Blackstone as considerably overvalued at current prices, with a significant gap between today’s market valuation and their fair value estimate.

Do you think there's more to the story for Blackstone? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com