Is There Now an Opportunity in Blackstone Following a 13.5% Share Price Drop?

If you're following Blackstone, you're probably wondering whether this is a dip to buy or a red flag to heed. The stock has taken investors on quite a ride lately, and deciding what to do next is no easy call. Over the last month, Blackstone shares have dropped 13.5%, and they are down 12.7% for the year so far. Even the past week was rough, with a 6.0% slide. Compare that to the strong returns of the past three and five years, up 77.1% and an impressive 247.0% respectively. It is clear there is a shift in sentiment or risk outlook under way.

Some of this change reflects the broader uncertainty weighing on the financial sector and alternative asset managers. Recent headlines have highlighted investor concerns about private equity valuations in a higher-rate environment and the potential for regulatory shifts affecting how firms like Blackstone operate. While none of these updates are seismic, the cumulative effect is evident in the day-to-day volatility and recent slump in price.

So, is Blackstone a bargain now? At first glance, it does not look like it based on quantitative measures. The company’s valuation score, using six key checks for undervaluation, comes in at a flat 0 out of 6. That means it does not tick the box on any of these traditional “cheap stock” criteria right now.

But valuation is more than just a number, and traditional approaches do not always tell the full story. Let’s break down these methods and see what they reveal about Blackstone’s current standing, before we talk about a smarter way to think about value at the end of this article.

Blackstone scores just 0/6 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 estimates a stock's value by focusing on how much profit a company generates above its true cost of capital. This method measures whether Blackstone is using its investors' capital effectively, rather than simply relying on traditional valuation ratios or dividend yields.

Looking at Blackstone's data, the Book Value stands at $10.72 per share, with a Stable EPS (Earnings Per Share) of $2.80 as predicted by analyst consensus. Blackstone's Cost of Equity, or the expected return demanded by investors, is $0.50 per share. This means the company is delivering an Excess Return of $2.30 per share. The firm boasts a robust average Return on Equity of 46.20%, supported by a projected Stable Book Value of $6.07 per share.

Despite these impressive figures for return on invested capital, the Excess Returns model calculates Blackstone's fair value at $50.69 per share. Compared to the current stock price, this model implies the shares are 199.2% overvalued, sending a clear caution to investors not to get carried away by headline growth or past performance alone.

Result: OVERVALUED

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

Our Excess Returns analysis suggests Blackstone may be overvalued by 199.2%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Blackstone Price vs Earnings

The Price-to-Earnings (PE) ratio is a standard metric for evaluating profitable companies like Blackstone, as it directly relates a company's share price to its earnings power. For investors, the PE ratio provides a quick way to gauge whether a stock appears expensive or cheap relative to the profits it generates, especially when earnings are consistent and growing.

Growth expectations and risk play a significant role in determining what constitutes a "normal" or "fair" PE ratio. Typically, companies with higher expected growth or lower risk command a higher PE, because investors are willing to pay for the potential of greater future profits and more stability.

Blackstone currently trades at a PE of 43.8x. For context, this is well above the industry average for Capital Markets companies, which is 26.7x, and slightly higher than its peer group average of 42.1x. However, just looking at these numbers does not reflect the full picture.

This is where Simply Wall St's proprietary "Fair Ratio" is relevant. The Fair Ratio is a data-driven benchmark that considers not just earnings but also growth outlook, profit margins, risk profile, market cap, and the dynamics of Blackstone's specific industry. Unlike a straightforward peer or industry comparison, it addresses the question of how a stock should be valued given everything that makes it unique.

For Blackstone, the Fair Ratio is calculated at 26.5x. This is considerably below the current 43.8x at which the shares are trading, suggesting the market is placing a significant premium on Blackstone that is not entirely justified by underlying fundamentals or near-term prospects.

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 Blackstone Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal investment storyline; it is how you connect the company’s business outlook, industry dynamics, and your assumptions about key numbers (like fair value, future revenue, earnings, and profit margins) into one coherent view. In essence, a Narrative links Blackstone’s story to your financial forecast and then to a fair value, all in a way that is simple to create and update.

On Simply Wall St’s platform, millions of investors use Narratives from the Community page as an accessible tool to shape, document, and refine their investment decisions. They allow you to directly compare your own Fair Value estimate to the current Price, making it clearer when to buy or sell. Every Narrative dynamically adjusts as new news or earnings updates roll in. For example, right now some investors see Blackstone’s fair value as high as $202 based on global alternative asset demand, while others are as cautious as $124 due to operational and market risks. Narratives make it easy to see these different perspectives and choose the one that best fits your own view and risk appetite.

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

• 🐂 Blackstone Bull Case

  Fair Value: $178.79

  Undervalued by 15.2%

  Revenue Growth: 19.70%

  • Blackstone is positioned for strong future growth with high inflows and substantial capital to invest in undervalued assets.
  • Strategic partnerships and innovations in private credit and wealth management are driving expansion and boosting potential revenue streams.
  • Analyst consensus expects robust earnings and margin improvement. However, macroeconomic risks and only a modest premium to fair value mean a cautious approach is warranted.
• 🐻 Blackstone Bear Case

  Fair Value: $124.55

  Overvalued by 21.8%

  Revenue Growth: 15.85%

  • Rapid expansion in infrastructure and private wealth may create operational inefficiencies, potentially hurting future earnings growth.
  • Heavy reliance on large-scale deployments and fast-moving technology sectors could lead to unpredictable revenues and competition-related risks.
  • This viewpoint suggests the current price significantly overshoots fair value, despite improving business fundamentals, because market optimism may be too high.

Do you think there's more to the story for Blackstone? 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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