Blackstone reported an economic net income (ENI) of $1.25 per unit, higher than consensus estimate of $0.93 per unit

The Blackstone Group reported better-than-expected earnings and distribution, but its base compensation looks weak, according to analysts at Sterne Agee.

Blackstone financial results

Blackstone reported an economic net income (ENI) of $1.25 per unit, higher than consensus estimate of $0.93 per unit driven by lower base compensation at $199.5 million during the fourth quarter.

During the quarter, Blackstone generated $2.13 billion in total revenues. The company said its fee revenues were around $715.85 million and performance fees were approximately were $1.32 billion. Its investment income was $98.42 million.

Blackstone

The asset manager said its increased investment activity led to $8.1 billion capital invested during the period. It raised $19.1 billion capital during the quarter.

According to Sterne Agee analysts, Jason Weyeneth and Samuel Ross, Blackstone’s base compensation of $199.5 million was $138 million lower than their estimate and down $118 million from the average of the previous three quarter.

For the full year 2014, the analysts noted that Blackstone’s base compensation rose 3.4%.  They commented that the asset manager’s lower level base compensation in the fourth quarter “could reflect year-end true-ups and more aggressive accruals earlier in the year.”

Blackstone said its full-year ENI was $4.3 billion or 3.76 per unit, up by 24% from last year. The company said its funds appreciated $24.5 billion, significantly outperformed the relevant market indices.

Its total invested capital in 2014 was $26.4 billion, up by 73%. According to the asset manager, 47% of the $26.4 billion were invested outside North America and 48% were deployed in products launched since the IPO. The asset manager said its investment activities reflect its unique geographic and product diversification.

Blackstone ended the year with $290 billion assets under management (AUM), up by 9% year-over-year. The asset manager raised $56.9 billion in capital for the year.

Blackstone distribution

During the fourth quarter, Blackstone distributed $0.78 per common unit payable on February 17. Its distribution was higher than the $0.65 per unit consensus estimate.

Weyeneth and Ross commented that the higher-than-anticipated distribution was “driven by better-than-expected fee-related earnings and lower-than-modeled carry compensation payouts in private equity and real estate, partially offset by lower-than-anticipated overall realized performance fees…”

The analysts noted that Blackstone’s fundamentals were strong during the quarter, aside from some weak returns in its credit segment. They noted that the asset manager have huge realizations, growing accrued entry and strong performance from PE and RE segments and its assets continue to increase.

Blackstone stock reaction

The shares of Blackstone were trading around $36.53 per share, slightly down at the time of this writing around 11:35 A.M in New York.

Weyeneth and Ross commented that the reaction of the company’ stock would be a “bit muted” given the high expectations of investors headed into the quarter and the nature of the beat.

Early this month, Morgan Stanley analyst Michael Cyprys issued a report indicating that Blackstone is best-positioned among the asset managers in the United States in the fourth quarter of 2014.