BlackRock, Inc. (BLK)

Total return at 5 years: 7.9%/year = 5.6% appreciation + 2.3% dividend. The target price ($1,422) is ex-dividend; the $141 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $1,698 · Multiples $1,264) exceeds the market price ($1,084).

Today — fairly valued: at $1,084 trades ~14.3% below its value discounted to today (~$1,264); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — En valor: the target price ($1,422) plus dividends yield between the 4% floor and the 10% average return — a reasonable return, though without the margin of a great investment.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$800.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($1,084) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-1.1%/year) than we project (9.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$8 bn of owner earnings in year 5 (vs ~$13 bn of our base case). It recalculates if the DCF assumptions are edited.

A bank is valued on equity (P/E × common earnings + price/tangible book), not EV: deposits and debt are funding. It returns capital via dividend + buyback —the buyback reduces the share count, so earnings per share grow faster than aggregate earnings—. Total return adds the dividend collected along the way. In edit mode, the metric, shares, dividend, and exit multiple can be adjusted.

Equity is valued per share: the adjusted net income the company reconciles against the accounting figure in its earnings release, divided by projected shares and multiplied by the exit multiple. The adjusted base excludes the amortization and impairment of acquisition intangibles, the change in fair value of contingent consideration, the restructuring charge and the charitable contribution, and assumes the exchange of the Subco units issued for HPS; stock-based compensation is expensed within it. Year 0 is the TTM to Jun-2026 and the revenue path starts below the reported year-over-year figure because that figure carries the annualization of HPS and market appreciation that is not extrapolated.

Today's multiple compresses on its own going forward as the metric per share grows (accelerated by the buyback, which reduces the share count). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—. Total return adds the dividend collected; the required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $1,422 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $1,084, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $1,422 in 5 years plus $141 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $1,264. Against the current market price ($1,084), the margin of safety is 14.3% (trades below the maximum → there is margin) and the total return at that price would be 7.9% annually.

• Multiple paid. 21× adjusted earnings, above the archetype band for a scale asset manager.
• Estimated return. +8% annually over five years, with +2% contributed by the dividend.
• Dividend yield. 2.1% at market price, with a payout ratio around 45% of adjusted earnings.
• Asymmetry. The adverse scenario returns +8% and the favorable one +8%: the downside path depends on the market.

• Return on equity. 14.0% on equity swollen by acquisition goodwill, comfortably above the 10% bar.
• Predictability of the flow. Fees on balances plus contracted technology revenue: high predictability while markets do not correct.
• Tangible equity. Negative: goodwill and intangibles exceed book equity after GIP, Preqin and HPS.
• Reinvestment runway. Private markets and data offer a destination for capital, but they are bought expensively and through acquisitions.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

In an asset manager, revenue breaks down into assets under management by average fee rate. Balances move on three forces -net inflows, market appreciation and foreign exchange- and only the first measures the business's own capture, which is why the metric the company uses as an internal target is organic base fee growth, which combines flows with the fee rate of what comes in. Technology annual contract value is the leading indicator of subscription revenue, which is contracted and does not depend on the level of the stock market.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Organic growth. 10% organic base fee growth over twelve months, above the company's internal target.
• Quality of growth. 71% of the 2025 increase in balances came from markets and foreign exchange, not from inflows: it does not extrapolate.
• Product mix. Alternatives are 3% of balances and 17% of fees: each point of mix is worth a great deal.
• Technology and subscriptions. Annual contract value growing at a double-digit organic rate, with contracted revenue that does not depend on the stock market.

• Recurring revenue on balances. Fees accrue on assets under management, which are sticky in the institutional channel.
• Very capital-light. $423 million of capital expenditure over twelve months on $27.3 billion of revenue.
• Sensitivity to market levels. Revenue falls with the stock market without any error on the company's part: it is a risk inherent to the model.
• Differentiated product. Aladdin and private markets data differentiate; the index fund is, at the margin, a price product.
• Relevance in ten years. Managing long-term savings and risk infrastructure will not disappear; the question is at what fee.

• ✕Value creation (ROTCE − 10% bar)-10pp

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Debt. $12.7 billion of debt against $10.5 billion of cash: low leverage for the size of earnings.
• Coverage. $543 million of interest expense over the last twelve months ($614 million in 2025) against operating income several times larger.
• Liquidity. A business with no material working capital needs or loan portfolio to fund.
• Accounting cushion. Tangible equity is negative: a goodwill impairment would hit equity directly.

How cash comes in and how it is deployed. In green, the business's own cash (the owner-FCF it generates and reinvests); in gray, the float and credit — customer and funding money, which is not the shareholder's.

Breakdown of cash uses over the twelve months to Jun-2026: $3,439 million in dividends ($3,265 million for fiscal year 2025 plus the $1,820 million accumulated in the first half of 2026 minus $1,646 million for the first half of 2025), buybacks under the program of about $2,050 million, no material acquisition spending in the window -the Preqin purchase, about $3.2 billion, closed in March 2025 and falls outside the TTM to Jun-2026- and $423 million of capital expenditure. The HPS purchase was paid substantially in exchangeable units of a consolidated subsidiary and therefore does not appear as a cash outflow, even though it diluted shareholders.

• Capital allocation. Four acquisitions in two years reorient the company; the return on that deployment is still to be proven in the average fee rate.
• Shareholder return. Dividend growing for more than a decade and buybacks raised to $2.0 billion annually in 2026.
• Dilution. HPS was paid substantially in units exchangeable for shares: the diluted count rose from 151.6 to 160.9 million in one year.
• Continuity. Founder at the helm since 1988 and co-founder acting as president: high continuity, with the associated succession risk.

• It does not trade cheap: at 21× adjusted earnings, the market is paying above the band that corresponds to a scale asset manager.
• The market is crediting it for the pivot toward private markets and data, where the fee rate is several times that of an index fund, and is paying in advance for that mix shift.
• It is also paying for the nature of Aladdin's revenue, contracted and recurring, which does not depend on the level of the stock market and merits a different valuation logic than the rest of the company.
• The flip side is that the price leaves little room for error: revenue is a percentage of balances the company does not control, and a market correction translates into lower earnings immediately.

The price embeds a sustained lift in the average fee rate from the pivot toward private markets and technology. It is a reasonable premise, but it is already paid for: the estimated return of +8% annually reflects it.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at -1%/year (-6% total): the margin of safety protects the downside. The bull (+13%/year, +86% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Market. Revenue is a percentage of balances: a stock market correction cuts earnings immediately.
• Fee compression. In index products competition is fought on price and scale is the only cushion.
• Regulatory and political. Common ownership, concentrated proxy voting, state laws and the risk of systemic designation.
• Integration. Four acquisitions in two years, with the report itself acknowledging benefits may not materialize.
• Technology and third parties. Aladdin depends on cloud providers; the report states recurring cyberattacks against the company.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: ROTCE 0% does not clear the 10% bar.

• Peter Lynch Growth at a reasonable price (GARP)

  A fast grower growing 9% at a PEG of 2.3 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Not applicable — the Magic Formula excludes financials and regulated businesses (EBIT/EV does not capture the operating leverage).

• Howard Marks Perception vs reality + cycle

  The price discounts -1% vs our 9%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -4%/yr, bull-scenario ceiling +11%/yr over 5y: reasonable asymmetry, without an ample cushion.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, stable; sources: efficient scale, switching costs, cost advantage, intangibles, network effects → passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -1%, within what we project (9%) — the story squares with the numbers.