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Affiliated Managers (AMG) Beats on Q1 Earnings, Costs Rise
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Affiliated Managers Group Inc. (AMG - Free Report) reported first-quarter 2017 economic earnings of $3.21 per share, outpacing the Zacks Consensus Estimate of $3.17. Also, earnings were up 9.9% year over year.
The quarter witnessed strong growth in assets under management (AUM). However, marginally lower revenues along with elevated expenses were the headwinds.
Affiliated Managers’ economic net income (ENI) was $183.2 million, an increase of 15% from the prior-year quarter.
Revenues Down, Expenses Rise
Total revenue declined marginally year over year to $544.3 million. Also, the top line missed the Zacks Consensus Estimate of $550.7 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $243.8 million, up 13% from the year-ago quarter.
Total operating expenses increased marginally year over year to $367.7 million. The rise was primarily due to an increase in compensation and related expenses.
As of Mar 31, 2017, total AUM grew 17.4% year over year to $753.5 billion. The quarter witnessed net client cash outflow of $1.3 billion.
Capital Position Deteriorated, Liquidity Position Decent
As of Mar 31, 2017, Affiliated Managers had $293.6 million in cash and cash equivalents compared with $430.8 million as of Dec 31, 2016. Notably, the company had $783.7 million of senior bank debt compared with $868.6 million as of Dec 31, 2016.
Shareholders’ equity as of Mar 31, 2017, totaled $3.58 billion, down from $3.62 billion as of Dec 31, 2016.
Share Repurchases
During the reported quarter, the company repurchased $80 million worth of common stock.
Our Take
Affiliated Managers remains well positioned for future growth based on successful partnerships and global distribution capability, along with a diverse product mix. Also, a strong balance sheet position helped it initiate dividend payments, which should boost investors’ confidence in the stock.
However, we remain concerned about the impact of increased debt levels and higher intangibles on its near-term profitability.
Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise
Janus Capital Group, Inc.’s first-quarter 2017 adjusted earnings per share of 23 cents surpassed the Zacks Consensus Estimate of 21 cents. Better-than-expected results were driven by an increase in revenues. However, rise in operating expenses was a concern.
BlackRock, Inc. (BLK - Free Report) reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. The better-than-expected result was largely driven by an improvement in revenues, partially offset by an increase in expenses.
Lazard Ltd.’s (LAZ - Free Report) first-quarter 2017 adjusted earnings of 83 cents per share surpassed the Zacks Consensus Estimate by 3 cents. The reported figure compared favorably with 50 cents earned in the prior-year quarter. Earnings were primarily driven by higher revenues.
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Affiliated Managers (AMG) Beats on Q1 Earnings, Costs Rise
Affiliated Managers Group Inc. (AMG - Free Report) reported first-quarter 2017 economic earnings of $3.21 per share, outpacing the Zacks Consensus Estimate of $3.17. Also, earnings were up 9.9% year over year.
The quarter witnessed strong growth in assets under management (AUM). However, marginally lower revenues along with elevated expenses were the headwinds.
Affiliated Managers’ economic net income (ENI) was $183.2 million, an increase of 15% from the prior-year quarter.
Revenues Down, Expenses Rise
Total revenue declined marginally year over year to $544.3 million. Also, the top line missed the Zacks Consensus Estimate of $550.7 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $243.8 million, up 13% from the year-ago quarter.
Total operating expenses increased marginally year over year to $367.7 million. The rise was primarily due to an increase in compensation and related expenses.
As of Mar 31, 2017, total AUM grew 17.4% year over year to $753.5 billion. The quarter witnessed net client cash outflow of $1.3 billion.
Capital Position Deteriorated, Liquidity Position Decent
As of Mar 31, 2017, Affiliated Managers had $293.6 million in cash and cash equivalents compared with $430.8 million as of Dec 31, 2016. Notably, the company had $783.7 million of senior bank debt compared with $868.6 million as of Dec 31, 2016.
Shareholders’ equity as of Mar 31, 2017, totaled $3.58 billion, down from $3.62 billion as of Dec 31, 2016.
Share Repurchases
During the reported quarter, the company repurchased $80 million worth of common stock.
Our Take
Affiliated Managers remains well positioned for future growth based on successful partnerships and global distribution capability, along with a diverse product mix. Also, a strong balance sheet position helped it initiate dividend payments, which should boost investors’ confidence in the stock.
However, we remain concerned about the impact of increased debt levels and higher intangibles on its near-term profitability.
Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise
Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise | Affiliated Managers Group, Inc. Quote
Currently, Affiliated Managers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
Janus Capital Group, Inc.’s first-quarter 2017 adjusted earnings per share of 23 cents surpassed the Zacks Consensus Estimate of 21 cents. Better-than-expected results were driven by an increase in revenues. However, rise in operating expenses was a concern.
BlackRock, Inc. (BLK - Free Report) reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. The better-than-expected result was largely driven by an improvement in revenues, partially offset by an increase in expenses.
Lazard Ltd.’s (LAZ - Free Report) first-quarter 2017 adjusted earnings of 83 cents per share surpassed the Zacks Consensus Estimate by 3 cents. The reported figure compared favorably with 50 cents earned in the prior-year quarter. Earnings were primarily driven by higher revenues.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>