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Is Q4 Earnings Beat Less Likely for Affiliated Managers (AMG)?

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Affiliated Managers Group Inc. (AMG - Free Report) is scheduled to announce fourth-quarter and 2021 results on Feb 7, before the opening bell. Its earnings and revenues in the quarter are expected to have increased from the year-ago reported figures.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate. Results benefited from an improvement in revenues and growth in assets under management (AUM) balance, partly offset by higher expenses.

The company boasts an impressive earnings surprise history. Its earnings surpassed the consensus estimate in each of the trailing four quarters, the average beat being 5.2%.

Affiliated Managers Group, Inc. Price and EPS Surprise


Affiliated Managers Group, Inc. Price and EPS Surprise

Affiliated Managers Group, Inc. price-eps-surprise | Affiliated Managers Group, Inc. Quote

Earnings & Revenue Projections for Q4

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $5.81, which has been revised marginally upward over the past 30 days. The figure indicates a rise of 37.7% from the year-ago quarter’s reported figure.

The consensus estimate for sales is pegged at $658.7 million, indicating 18.8% year-over-year growth.

Key Development in Q4

In October, Affiliated Managers completed the acquisition of a majority equity stake in Parnassus Investments, one of the largest sustainable investing fund managers in the United States. The financial terms of the deal, which was funded through “existing corporate resources,” were not disclosed.

At the time of the deal announcement (in July 2021), Affiliated Managers noted that the addition of Parnassus would increase the company’s ESG-focused AUM balance to $80 billion, with AUM incorporating ESG factors into the investment process to roughly $600 billion.

AMG projected the deal to contribute nearly $15 million to EBITDA (net of one-time transaction costs) in the fourth quarter of 2021, while contributing $70 million to adjusted EBITDA as well as $1.30 to economic earnings per share in 2022.

Management Expectations for Q4

Adjusted EBITDA is expected to be $290-$340 million. The guidance includes a seasonally higher performance fee of $60-$100 million and the full impact of the Parnassus deal.

Interest expenses are expected to be $29 million, in line with the prior quarter. Controlling interest depreciation is expected to remain at the third-quarter 2021 level of $2 million.

The company’s share of reported amortization and impairments is expected to be $43 million, 19.4% higher than the third-quarter level of $36 million.

Intangible related deferred taxes are projected to be $12 million, stable sequentially.

Other economic items (excluding any mark-to-market impact) are anticipated to be $1 million.

Earnings Whispers

According to our quantitative model, the chances of Affiliated Managers beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Affiliated Managers is -0.65%.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

A couple of finance stocks, which you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases per our model, are Ares Capital Corporation (ARCC - Free Report) and Moody's Corporation (MCO - Free Report) .

The Earnings ESP for Ares Capital is +10.32% and it carries a Zacks Rank #2 (Buy) at present. ARCC is scheduled to report quarterly numbers on Feb 9.

Moody's is slated to report quarterly results on Feb 10. MCO currently has an Earnings ESP of +2.49% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Affiliated Managers Group, Inc. (AMG) - free report >>