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Affiliated Managers' (AMG) Rising Expenses Hurt Profitability

FII BLK AMG APO

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On Sep 23, 2016, we issued an updated research report on Affiliated Managers Group Inc. (AMG - Free Report) . Mounting expenses remain a major concern for this global asset manager.  

The constantly mounting expenses remain a challenge for Affiliated Managers. Though expenses declined in the first six months of 2016, we expect the same to increase going forward as the company continues to invest in affiliates. Also, the company’s inclination toward acquisitions is bound to further elevate costs.

Moreover, despite a healthy liquidity level and steady assets under management, Affiliated Managers has been unsuccessful in gaining investors’ confidence. The company has a high debt level and is also vulnerable to unfavorable industry conditions. Owing to this, there is an uncertainty in the market regarding its performance. This is evident from the 9.6% year-to-date decline in the company’s share price.

Analysts seem to be bearish on Affiliated Managers’ growth prospects as well. This is reflected in the Zacks Consensus Estimate, which declined nearly 1% to $12.86 and $14.93, respectively, for 2016 and 2017, over the last 60 days.

Yet, Affiliated Managers’ diversified investment products is expected to pave way for growth. Further, the company, with its strong balance sheet and liquidity position, has considerable capabilities to invest in other companies.

Currently, Affiliated Managers carries a Zacks Rank #4 (Sell).

Some Investment Management Stocks Worth a Look

Some better-ranked investment management firms include Apollo Global Management, LLC (APO - Free Report) Federated Investors, Inc. (FII - Free Report) and BlackRock, Inc. (BLK - Free Report) .

Apollo Global, currently sporting a Zacks Rank #1 (Strong Buy), has been witnessing upward estimate revisions over the last 60 days. Year-to-date, the company’s shares have surged over 18%.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Currently holding a Zacks Rank #2 (Buy) stock, Federated has been witnessing upward estimate revisions over the last 60 days. Year-to-date, the company’s shares have increased nearly 10%.

BlackRock, with a Zacks Rank #2, has been witnessing upward estimate revisions over the last 60 days. Also, the company’s shares have jumped around 8% so far this year.

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