• Wondering whether Blackstone at about US$118 a share is offering value right now, or if the price already reflects its prospects? This article breaks that question down into clear valuation checkpoints you can weigh for yourself.
• The stock is up 1.0% over the last week, though it is down 2.0% over the past month, down 25.7% year to date, and has declined 11.6% over the last year, while still showing a 51.2% return over three years and a 51.7% return over five years.
• Recent headlines around Blackstone have focused on its role as a large alternative asset manager, including coverage of its activity across private equity, real estate, credit, and infrastructure. This mix of attention can influence how investors think about the stock's risk profile and long term opportunity, which often shows up in price swings like those seen over the last year.
• Right now, Blackstone scores a 2 out of 6 valuation score. This means it screens as undervalued on two of the six checks that will be unpacked next. There will be a look at those standard methods before finishing with a different way to think about what "fair value" really means for this stock.

Blackstone scores just 2/6 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 looks at how effectively Blackstone turns its equity base into earnings after covering the cost of that equity. In simple terms, it asks whether the company is earning more on each dollar of equity than investors require as compensation for risk, and then capitalizes that gap.

For Blackstone, book value is $10.66 per share and the stable book value estimate is $12.27 per share, based on future book value estimates from 3 analysts. Stable EPS is $5.46 per share, sourced from weighted future return on equity estimates from 7 analysts. Against a cost of equity of $0.98 per share, this implies an excess return of $4.48 per share. The average return on equity used in the model is 44.51%.

Using these inputs, the Excess Returns model points to an intrinsic value of about $113.63 per share. Compared with the current price of about $118, this implies the stock screens as about 3.8% overvalued, which is a relatively small gap.

Result: ABOUT RIGHT

Blackstone is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Blackstone Price vs Earnings

For a profitable company like Blackstone, the P/E ratio is a useful shorthand for how much you are paying for each dollar of earnings. It ties directly to what the business is currently generating, which many investors find easier to relate to than cash flow models.

What counts as a “normal” or “fair” P/E depends on how quickly earnings are expected to grow and how risky those earnings are. Higher growth and lower perceived risk can support a higher multiple, while slower growth or higher risk usually call for a lower one.

Blackstone trades on a P/E of 30.35x. That is below the Capital Markets industry average of 39.37x, but above the peer group average of 22.93x. Simply Wall St’s Fair Ratio for Blackstone is 24.62x, which is a proprietary estimate of what the P/E might be given the company’s earnings profile, industry, profit margins, market cap, and risk factors.

This Fair Ratio can be more useful than a simple peer or industry comparison because it adjusts for company specific traits rather than assuming all stocks should trade at similar levels. With the current 30.35x P/E sitting above the 24.62x Fair Ratio, Blackstone screens as overvalued on this check.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your Blackstone Narrative

Earlier there was a mention that there is an even better way to understand valuation. Narratives take that idea further by letting you attach a clear story about Blackstone to specific assumptions for future revenue, earnings and margins, which then flow through to a Fair Value that you can compare with the current share price.

On Simply Wall St, Narratives live in the Community page and are designed so that any investor can plug in a view on the business, see how that view translates into a full forecast, then quickly check whether that Fair Value sits above or below today’s price to help decide whether the stock might belong on a watchlist, be a potential add, or be one to trim.

Because Narratives update automatically when new earnings, news or analyst estimates are added, you can see how different viewpoints evolve. For example, there may be one Blackstone Narrative that aligns with a higher Fair Value of about US$183.06 built on more optimistic earnings and margin assumptions, and another that lines up closer to US$118.00 with more cautious expectations, giving you a clear range of stories to compare with your own.

Do you think there's more to the story for Blackstone? Head over to our Community to see what others are saying!

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.