Shares of Affiliated Managers Group (
AMG Quick Quote AMG - Free Report) have been strong performers lately, with the stock up 25.7% over the past month. The stock hit a new 52-week high of $191.48 in the previous session. Affiliated Managers Group has gained 87.2% since the start of the year compared to the 26.2% move for the Zacks Finance sector and the 27.3% return for the Zacks Financial - Investment Management industry. What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 1, 2021, Affiliated Managers reported EPS of $4 versus consensus estimate of $3.93 while it missed the consensus revenue estimate by 4.08%.
For the current fiscal year, Affiliated Managers is expected to post earnings of $18.03 per share on $2.38 billion in revenues. This represents a 34.96% change in EPS on a 17.37% change in revenues. For the next fiscal year, the company is expected to earn $20.7 per share on $2.74 billion in revenues. This represents a year-over-year change of 14.81% and 15.13%, respectively.
Affiliated Managers may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Affiliated Managers has a Value Score of A. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 10.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 11X versus its peer group's average of 13X. Additionally, the stock has a PEG ratio of 0.7. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Affiliated Managers currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Affiliated Managers meets the list of requirements. Thus, it seems as though Affiliated Managers shares could have a bit more room to run in the near term.
How Does Affiliated Managers Stack Up to the Competition?
Shares of Affiliated Managers have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Atlas (
ATCO Quick Quote ATCO - Free Report) , AllianceBernstein Holding L.P. ( AB Quick Quote AB - Free Report) , and Piper Sandler ( PIPR Quick Quote PIPR - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 34% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Affiliated Managers, even beyond its own solid fundamental situation.