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Affiliated Managers (AMG) Up 2.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Affiliated Managers Group (AMG - Free Report) . Shares have added about 2.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Affiliated Managers due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Affiliated Managers Q1 Earnings Beat as Revenues Rise
Affiliated Managers’ first-quarter 2022 economic earnings of $4.65 per share handily surpassed the Zacks Consensus Estimate of $4.32. The bottom line increased 8.6% year over year.
Results were aided by an improvement in revenues and growth in assets under management (AUM) balance, partly offset by higher expenses. Further, the company had a robust liquidity position.
Economic net income was $190 million, up 2.8% from the prior-year quarter.
Revenues & AUM Improve, Expenses Rise
Total revenues rose 8.6% year over year to $607.3 million. However, the top line missed the Zacks Consensus Estimate of $656.4 million.
Adjusted EBITDA was $255.3 million, up 3.4% from the year-ago quarter.
Total expenses increased 4.4% year over year to $395.1 million. An increase in all cost components, except for depreciation and other amortization costs, and other expenses led to the rise.
As of Mar 31, 2022, total AUM was $776.7 billion, up 5.2% year over year. Net client cash outflows in the quarter were $2.2 billion.
Capital & Liquidity Position Decent
As of Mar 31, 2022, Affiliated Managers had $501 million in cash and cash equivalents compared with $908.5 billion as of Dec 31, 2021. The company had $2.58 billion of debt, which increased 3.5% from the Dec 31, 2021 level.
Shareholders’ equity as of Mar 31, 2022, was $2.67 billion compared with $2.79 billion as of Dec 31, 2021.
Share Repurchase Update
In the reported quarter, the company repurchased shares worth $185 million.
Second-Quarter 2022 Outlook
Management expects adjusted EBITDA of $215-220 million based on the present AUM levels. The guidance reflects modest growth in performance fees.
Interest expenses are expected to be $29 million, in line with the prior quarter. Controlling interest depreciation is expected to remain at the fourth-quarter 2021 level of $2 million.
The company’s share of reported amortization and impairments is expected to be $32 million, almost on par with the prior quarter.
Intangible related deferred taxes are projected to be $16 million, similar to the first quarter of 2022 level.
Other economic items (excluding any mark-to-market impact) are anticipated to be $1 million.
Adjusted weighted average share count is estimated to be $40 million.
The GAAP tax rate is expected to be 26%. The cash tax rate is expected to be 18%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Affiliated Managers has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Affiliated Managers has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Affiliated Managers is part of the Zacks Financial - Investment Management industry. Over the past month, SEI Investments (SEIC - Free Report) , a stock from the same industry, has gained 2.9%. The company reported its results for the quarter ended March 2022 more than a month ago.
SEI reported revenues of $581.44 million in the last reported quarter, representing a year-over-year change of +27.6%. EPS of $1.36 for the same period compares with $0.89 a year ago.
For the current quarter, SEI is expected to post earnings of $0.90 per share, indicating a change of -3.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.9% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for SEI. Also, the stock has a VGM Score of A.
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Affiliated Managers (AMG) Up 2.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Affiliated Managers Group (AMG - Free Report) . Shares have added about 2.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Affiliated Managers due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Affiliated Managers Q1 Earnings Beat as Revenues Rise
Affiliated Managers’ first-quarter 2022 economic earnings of $4.65 per share handily surpassed the Zacks Consensus Estimate of $4.32. The bottom line increased 8.6% year over year.
Results were aided by an improvement in revenues and growth in assets under management (AUM) balance, partly offset by higher expenses. Further, the company had a robust liquidity position.
Economic net income was $190 million, up 2.8% from the prior-year quarter.
Revenues & AUM Improve, Expenses Rise
Total revenues rose 8.6% year over year to $607.3 million. However, the top line missed the Zacks Consensus Estimate of $656.4 million.
Adjusted EBITDA was $255.3 million, up 3.4% from the year-ago quarter.
Total expenses increased 4.4% year over year to $395.1 million. An increase in all cost components, except for depreciation and other amortization costs, and other expenses led to the rise.
As of Mar 31, 2022, total AUM was $776.7 billion, up 5.2% year over year. Net client cash outflows in the quarter were $2.2 billion.
Capital & Liquidity Position Decent
As of Mar 31, 2022, Affiliated Managers had $501 million in cash and cash equivalents compared with $908.5 billion as of Dec 31, 2021. The company had $2.58 billion of debt, which increased 3.5% from the Dec 31, 2021 level.
Shareholders’ equity as of Mar 31, 2022, was $2.67 billion compared with $2.79 billion as of Dec 31, 2021.
Share Repurchase Update
In the reported quarter, the company repurchased shares worth $185 million.
Second-Quarter 2022 Outlook
Management expects adjusted EBITDA of $215-220 million based on the present AUM levels. The guidance reflects modest growth in performance fees.
Interest expenses are expected to be $29 million, in line with the prior quarter. Controlling interest depreciation is expected to remain at the fourth-quarter 2021 level of $2 million.
The company’s share of reported amortization and impairments is expected to be $32 million, almost on par with the prior quarter.
Intangible related deferred taxes are projected to be $16 million, similar to the first quarter of 2022 level.
Other economic items (excluding any mark-to-market impact) are anticipated to be $1 million.
Adjusted weighted average share count is estimated to be $40 million.
The GAAP tax rate is expected to be 26%. The cash tax rate is expected to be 18%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Affiliated Managers has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Affiliated Managers has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Affiliated Managers is part of the Zacks Financial - Investment Management industry. Over the past month, SEI Investments (SEIC - Free Report) , a stock from the same industry, has gained 2.9%. The company reported its results for the quarter ended March 2022 more than a month ago.
SEI reported revenues of $581.44 million in the last reported quarter, representing a year-over-year change of +27.6%. EPS of $1.36 for the same period compares with $0.89 a year ago.
For the current quarter, SEI is expected to post earnings of $0.90 per share, indicating a change of -3.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.9% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for SEI. Also, the stock has a VGM Score of A.