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Here's Why Affiliated Managers (AMG) Stock in Worth Betting On

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It seems to be a wise idea to add Affiliated Managers Group (AMG - Free Report) stock to your portfolio now. The company’s diverse product mix, initiatives to strengthen the retail market operations, a record of successful partnerships and global distribution capability are expected to aid growth.

Notably, analysts seem to be optimistic regarding the company’s earnings growth prospects. The Zacks Consensus Estimate for its current-year earnings has moved 1% upward over the past 30 days. Moreover, the consensus estimate for 2021 earnings has moved 2% upward over the same period. Thus, Affiliated Managers currently carries a Zacks Rank #2 (Buy).

Looking at its price performance, shares of the company have gained 40.6% over the past six months compared with the industry’s rally of 26.9%.

Mentioned below are some other factors that make Affiliated Managers an attractive investment option now.

Earnings Strength: The company witnessed earnings growth of 2.4% over the last three to five years. Also, it has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 7.2%.

While the company’s earnings are projected to decline 10.8% in 2020, the trend will likely reverse post that. In 2021, earnings are projected to grow 5%. Moreover, the company’s long-term (three-five years) projected earnings growth rate of 11.9% promises reward for investors.

Solid Inorganic Growth: Supported by a strong balance sheet and liquidity position, Affiliated Managers has considerable capability to invest in other companies and is expected to continue generating meaningful growth through new investments. In November 2020, the company announced the acquisition of a minority stake in Jackson Square Partners.

In June, it announced that it will become a minority equity partner to Inclusive Capital Partners, while in February it acquired a minority equity interest in Comvest Partners. Rising demand for equity and alternative strategies among institutional clients are expected to continue to support the company’s profitability.

Superior Return on Equity (ROE): Affiliated Managers’ ROE supports its growth potential. Its ROE of 19.15% compares favorably with the industry average of 11.30%, implying that it is more efficient in using shareholders’ funds when compared with peers.

Favorable Valuation: The company currently seems undervalued when compared with the broader industry with respect to its PEG and price/book (P/B) ratios. It has a PEG ratio of 0.67, below the industry average of 1.40. Also, its (P/B) ratio of 1.39 is lower than the industry average of 2.10.

Moreover, the stock has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Also, our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best upside potential.

Other Stocks to Consider

A few other stocks from the finance space worth a look are mentioned below.

Credit Acceptance Corporation (CACC - Free Report) has witnessed an upward earnings estimate revision of 80.1% for 2020 over the past 60 days. This Zacks Rank #2 stock has depreciated 1.2% over the past three months.

The Charles Schwab Corporation’s (SCHW - Free Report) current-year earnings estimates rose 8.8% in 60 days’ time. Further, the company’s shares have appreciated 45.5% over the past three months. At present, it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Raymond James Financial, Inc. (RJF - Free Report) has witnessed an upward earnings estimate revision of 10.2% for the current fiscal year in the past 60 days. This Zacks #2 Ranked stock has gained 28.5% over the past three months.

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