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Analyst Blog

Shares of Affiliated Managers Group Inc. (AMG - Analyst Report) crafted a new 52-week high, touching $203.74 in the first half of the trading session on Dec 2. However, the stock closed the session at $200.78, which reflects a solid year-to-date return of 48.9%. The trading volume for the session was 301,369 shares.

Despite hitting its 52-week high, this Zacks Rank #2 (Buy) stock has plenty of upside left, given its strong estimate revisions over the last 30 days and expected long-term earnings growth of 16.45%.

Growth Drivers

Impressive third-quarter 2013 results including an earnings surprise of 2.34%, significant improvement in assets under management (AUM) and a strong liquidity position were the primary growth drivers for Affiliated Managers.

On Nov 5, Affiliated Managers reported its third-quarter 2013 economic net income (ENI) of $2.19 per share, which beat the Zacks Consensus Estimate by a nickel. Moreover, this compared favorably with ENI of $1.91 recorded in the year-ago quarter.

A year-over-year increase of 18.0% in total revenue and a significant decline of 27% in non operating expenses were the tailwinds for the quarter. Also, AUM grew 22.2% year over year to $508.4 billion.

Further, as of Sep 30, 2013, cash and cash equivalents surged 40% year over year to $522.4 million. However, a 16.8% increase in operating expenses acted as the headwind for the quarter.

Estimate Revisions Show Potency

Over the last 30 days, all 6 estimates for 2013 have been revised upward, lifting the Zacks Consensus Estimate by 1.5% to $9.66 per share. For 2014, all 6 estimates moved north, helping the Zacks Consensus Estimate advance 1.4% to $11.31 per share.

Some better-ranked Investment Management firms include Artisan Partners Asset Management Inc. (APAM - Snapshot Report), Virtus Investment Partners, Inc. (VRTS - Snapshot Report) and Waddell & Reed Financial, Inc. (WDR - Analyst Report). All these companies carry a Zacks Rank #1 (Strong Buy).