Has Blackstone (BX) Pullback Created A Better Entry Point For Investors?

• If you have been wondering whether Blackstone at around US$117 per share is starting to look appealing or still feels expensive, you are not alone.
• The stock is down 3.6% over the past week, 9.3% over the past month, and 26.3% year to date, although it is still up 51.1% over three years and 52.2% over five years.
• Recent coverage has focused on how listed alternative asset managers like Blackstone are being reassessed by the market as interest rates, fundraising conditions, and deal activity shift. This changing backdrop helps explain why the stock’s shorter term returns look weaker even though its multi year performance remains positive.
• Simply Wall St’s valuation checks give Blackstone a 2 out of 6 valuation score. The next sections will walk through different valuation methods to see what might be priced in today, then finish with a way to look beyond the numbers for a fuller view of value.

Blackstone scores just 2/6 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 model considers how much profit a company is expected to earn above the return that shareholders require, then capitalizes those excess profits into an estimate of intrinsic value per share.

For Blackstone, the model starts with a Book Value of US$10.66 per share and a Stable EPS estimate of US$5.46 per share, based on weighted future Return on Equity estimates from 7 analysts. The Average Return on Equity is 44.51%, compared with a Cost of Equity of US$0.98 per share. This leads to an Excess Return of US$4.48 per share. The Stable Book Value is estimated at US$12.27 per share, based on future Book Value estimates from 3 analysts.

Combining these inputs, the Excess Returns model produces an intrinsic value of about US$113.26 per share. With the stock price implying that Blackstone is about 3.3% above this estimate, the model indicates a small degree of overvaluation rather than a large gap.

Result: ABOUT RIGHT

Blackstone is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

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

For a profitable company, the P/E ratio is a straightforward way to gauge how much you are paying for each dollar of earnings. This makes it a useful cross check against more detailed models.

What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually calls for a lower one.

Blackstone is trading on a P/E of about 30.1x. That is below the Capital Markets industry average P/E of 40.1x and close to the peer group average of 29.4x, so on simple comparisons the stock sits in the same general range as similar companies.

Simply Wall St’s Fair Ratio, at 24.7x, is an estimate of the P/E that might be reasonable given factors like Blackstone’s earnings growth profile, profit margins, industry, market value and risk characteristics. Because it blends these company specific inputs, the Fair Ratio is more tailored than a broad industry or peer comparison.

Comparing the Fair Ratio of 24.7x with the current P/E of 30.1x suggests the stock is pricing in a richer multiple than this framework would indicate.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 18 top founder-led companies.

Upgrade Your Decision Making: Choose your Blackstone Narrative

Earlier the article mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story about Blackstone to the numbers by linking your view of its future revenue, earnings and margins to a forecast and then to a fair value that you can compare with the current share price. These Narratives live on the Community page, update automatically when new news or earnings arrive, and can differ widely. For example, one investor might lean toward a higher fair value around US$183 based on assumptions similar to the more optimistic cohort, while another might anchor closer to US$118 with more cautious assumptions. This gives you a transparent range of perspectives to test your own decision on whether the valuation you see looks attractive or not.

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.

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