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Should Value Investors Pick Affiliated Managers (AMG) Stock?
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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 Affiliated Managers Group, Inc. (AMG - 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, Affiliated Managers has a trailing twelve months PE ratio of 15.02, 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 21.47. If we focus on the long-term PE trend, Affiliated Managers’ current PE level puts it below its midpoint of 16.98 over the past five years. Moreover, the current level stands well below the highs for the stock, suggesting that it could be a great entry point.
Further, the stock’s PE compares favorably with the Zacks Finance sector’s trailing twelve months PE ratio, which stands at 16.91. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Affiliated Managers has a forward PE ratio (price relative to this year’s earnings) of just 14.15, so it is fair to say that a slightly more value-oriented path may be ahead for Affiliated Managers stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Affiliated Managers’ PEG ratio stands at just 0.85, compared with the Zacks Finance – Investment Management industry average of 1.26. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Affiliated Managers currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Affiliated Managers a solid choice for value investors.
What About the Stock Overall?
Though Affiliated Managers 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 Score of C and a Momentum Score of B. This gives AMG a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been somewhat encouraging. The current quarter has and full year estimates have seen one upward revision each, over the past 30 days compared to no downward revisions.
This has had a slightly positive impact on the consensus estimate, as the current quarter consensus estimate has climbed 0.5% in the past month, while the full year estimate has inched higher by 0.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Affiliated Managers Group, Inc. Price and Consensus
However, this somewhat bullish trend has likely not yet been reflected in the stock, as we have just a Zacks Rank #3 (Hold), which indicates expectations of in-line performance in the near term.
Bottom Line
Affiliated Managers is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock possesses an impressive Zacks Industry Rank (among top 39% of more than 250 industries) which hints at favorable broader factors. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Should Value Investors Pick Affiliated Managers (AMG) Stock?
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?
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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 Affiliated Managers Group, Inc. (AMG - 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, Affiliated Managers has a trailing twelve months PE ratio of 15.02, 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 21.47. If we focus on the long-term PE trend, Affiliated Managers’ current PE level puts it below its midpoint of 16.98 over the past five years. Moreover, the current level stands well below the highs for the stock, suggesting that it could be a great entry point.
Further, the stock’s PE compares favorably with the Zacks Finance sector’s trailing twelve months PE ratio, which stands at 16.91. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Affiliated Managers has a forward PE ratio (price relative to this year’s earnings) of just 14.15, so it is fair to say that a slightly more value-oriented path may be ahead for Affiliated Managers stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Affiliated Managers’ PEG ratio stands at just 0.85, compared with the Zacks Finance – Investment Management industry average of 1.26. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Affiliated Managers currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Affiliated Managers a solid choice for value investors.
What About the Stock Overall?
Though Affiliated Managers 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 Score of C and a Momentum Score of B. This gives AMG a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been somewhat encouraging. The current quarter has and full year estimates have seen one upward revision each, over the past 30 days compared to no downward revisions.
This has had a slightly positive impact on the consensus estimate, as the current quarter consensus estimate has climbed 0.5% in the past month, while the full year estimate has inched higher by 0.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Affiliated Managers Group, Inc. Price and Consensus
Affiliated Managers Group, Inc. Price and Consensus | Affiliated Managers Group, Inc. Quote
However, this somewhat bullish trend has likely not yet been reflected in the stock, as we have just a Zacks Rank #3 (Hold), which indicates expectations of in-line performance in the near term.
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Bottom Line
Affiliated Managers is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock possesses an impressive Zacks Industry Rank (among top 39% of more than 250 industries) which hints at favorable broader factors. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>