In this week’s content analysis, we take a look at Blackstone Group’s (BX) 1st quarter results that were updated in StockPointer last Friday. Blackstone is also one of the companies we added in our US-Large model portfolio on March 2nd, and we are very pleased with its performance since then (+11.18% Vs -0.36% for the S&P500). 
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Starting with the intrinsic value, it jumped to $69.36 from $61.56, a 12.7% increase, thanks to a higher return on capital and a stable cost of capital. The P/IV ratio is now even more attractive at 0.6, showing a potential upside of 66.25% from current price to intrinsic value. The FGV, at -22.6% as of April 21s, also shows an interesting discount. This implies that either the market still doesn’t fully recognize Blackstone’s current operating value (COV), or that investors are anticipating a decrease in performance over the next several quarters. Seeing how fast the company has grown in the past 4 years, both in terms of invested capital and operating profit, we think that the former is the most likely justification.
As for economic performance, the EVA grew from a negative to a positive value in early 2013, and has been continuously increasing since then. The TTM NOPAT (Net Operating Profit After Taxes) went from $70M in March 2012 to $4.5B this year (a 6300% increase), while the invested capital “only” increased by 45% during that same period. This reflects the management’s ability to generate constant growth by focusing only on high quality and profitable acquisitions.
Concluding with the company’s accounting performance, Blackstone averaged revenue growth of 27.3% per year over the last 5 years, and the average yearly dividend growth is of 39.05% over the same period. The current dividend yield of 6.32% is also attractive.
