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Is Artisan Partners (APAM) a Good Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Artisan Partners Asset Management Inc. (APAM - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Artisan Partners has a trailing twelve months PE ratio of 13.94, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.99. If we focus on the long-term PE trend, Artisan Partners’ current PE level puts it below its midpoint over the past three years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Further, the stock’s PE also compares favorably with the Zacks classified Investment Management industry’s trailing twelve months PE ratio, which stands at 14.98. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Artisan Partners has a forward PE ratio (price relative to this year’s earnings) of 12.93, so it is fair to say that a slightly more value-oriented path may be ahead for Artisan Partners stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Artisan Partners has a P/S ratio of about 2.13. This is lower than the S&P 500 average, which comes in at 3.20 right now. As we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
APAM is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Artisan Partners currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Artisan Partners a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Artisan Partners is just 1.19, a level that slightly lower than the industry average of 1.43. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, APAM is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Artisan Partners might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives APAM a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending higher. The current quarter has seen two estimates go higher in the past sixty days compared to none lower, while the full year estimate has also seen two upward and zero downward revisions in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate as well as the full year estimate has risen by 7.7% each in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Artisan Partners Asset Management Inc. Price and Consensus
This positive trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for outperformance from the company in the near term.
Bottom Line
Artisan Partners is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 38%) and a solid Zacks Rank instills investor confidence.
However, it is hard to get too excited about this company overall as over the past one year, the Zacks Investment Management industry has underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Artisan Partners.
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Is Artisan Partners (APAM) a Good Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Artisan Partners Asset Management Inc. (APAM - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Artisan Partners has a trailing twelve months PE ratio of 13.94, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.99. If we focus on the long-term PE trend, Artisan Partners’ current PE level puts it below its midpoint over the past three years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Further, the stock’s PE also compares favorably with the Zacks classified Investment Management industry’s trailing twelve months PE ratio, which stands at 14.98. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Artisan Partners has a forward PE ratio (price relative to this year’s earnings) of 12.93, so it is fair to say that a slightly more value-oriented path may be ahead for Artisan Partners stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Artisan Partners has a P/S ratio of about 2.13. This is lower than the S&P 500 average, which comes in at 3.20 right now. As we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
APAM is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Artisan Partners currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Artisan Partners a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Artisan Partners is just 1.19, a level that slightly lower than the industry average of 1.43. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, APAM is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Artisan Partners might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives APAM a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending higher. The current quarter has seen two estimates go higher in the past sixty days compared to none lower, while the full year estimate has also seen two upward and zero downward revisions in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate as well as the full year estimate has risen by 7.7% each in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Artisan Partners Asset Management Inc. Price and Consensus
Artisan Partners Asset Management Inc. Price and Consensus | Artisan Partners Asset Management Inc. Quote
This positive trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for outperformance from the company in the near term.
Bottom Line
Artisan Partners is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 38%) and a solid Zacks Rank instills investor confidence.
However, it is hard to get too excited about this company overall as over the past one year, the Zacks Investment Management industry has underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Artisan Partners.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>