Blackstone (BX) Stock Could Be 23.7% Undervalued After Credit Launch And Real Estate Hire

Why Blackstone’s latest hiring move and credit launch matter for investors

Blackstone (BX) is drawing attention after expanding its private credit platform with SablePointe Credit Strategies and hiring Carey S. Roberts as Senior Managing Director and General Counsel for its real estate business.

Together, these developments highlight how the company is placing more emphasis on private lending and real estate, two areas that already account for large portions of its US$14.4b in revenue across multiple investing segments.

See our latest analysis for Blackstone.

These moves come as Blackstone trades at US$123.79, with its share price return up 4.4% over the past 30 days and 12.1% over 90 days, yet down 22.05% year to date. Its 3 year total shareholder return of 54.64% and 5 year total shareholder return of 48.98% point to a mixed picture of shorter term pressure against longer term gains.

If Blackstone’s push in private credit and real estate has caught your attention, it may be a good time to broaden your search and check out 20 top founder-led companies

The mixed share price record and recent revenue and net income growth at Blackstone raise a key question for you as an investor: is the current valuation overlooking its private markets expansion, or already reflecting future growth potential?

Most Popular Narrative: 23.7% Undervalued

On the most followed view, Blackstone’s fair value of $162.26 sits well above the last close at $123.79, which puts a spotlight on the assumptions driving that gap.

The firm is well-positioned to benefit from market dislocation with $177 billion of dry powder available for opportunistic investments, potentially increasing future earnings as capital is deployed in undervalued assets.
Blackstone's strategic alliance with Wellington and Vanguard aims to develop integrated public-private investment solutions, potentially expanding revenue channels by tapping into the private wealth market.

Read the complete narrative.

Curious what kind of revenue trajectory and margin profile would support that higher fair value for Blackstone? The narrative leans on ambitious growth, richer profitability and a future earnings multiple that assumes investors keep paying up for this model.

Result: Fair Value of $162.26 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, any setback in private wealth fundraising or prolonged redemption pressure in BCRED could weigh on Blackstone’s fee revenue and challenge this view that the stock is undervalued.

Find out about the key risks to this Blackstone narrative.

Another View on Blackstone’s Valuation

The SWS DCF model points in a different direction, with an estimated future cash flow value of $113.42 per share compared with Blackstone’s recent price of $123.79, which implies the stock may be pricing in more growth than this model supports. Which story do you think fits your expectations?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Blackstone for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 45 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Seeing both optimism and concern around Blackstone’s outlook, it makes sense to review the data yourself and decide where you stand. You can start with 2 key rewards and 3 important warning signs

Looking for more investment ideas beyond Blackstone?

Blackstone may be on your radar, but you do not want to miss other opportunities that match your goals and risk comfort using focused stock lists.

• Target potential long term bargains by scanning companies that screen as attractively priced on cash flow and quality metrics through the 45 high quality undervalued stocks.
• Prioritise resilience by checking out companies that score well on financial strength using the solid balance sheet and fundamentals stocks screener (48 results).
• Hunt for underfollowed opportunities by reviewing the screener containing 19 high quality undiscovered gems before other investors catch on.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com