Affiliated Managers Group Inc. (AMG Quick QuoteAMG - Free Report) is scheduled to report third-quarter 2016 results on Monday, Oct 31, before the market opens.

Last quarter, Affiliated Managers’ earnings outpaced the Zacks Consensus Estimate. Results reflected a decrease in operating expenses, partially offset by a fall in revenues.

Moreover, this earnings beat translated into a bullish share price movement, with Affiliated Managers' stock gaining around 4.5% during the three month period ended Sep 30, 2016.

Further, analysts seem to be happy with the company’s performance in the just concluded quarter. Affiliated Managers witnessed four upward revisions in earnings estimates (versus no downward revision) over the last 30 days. Notably, the Zacks Consensus Estimate of $3.00 remained stable over the last seven days.

In addition, Affiliated Managers boasts a decent earnings surprise history, as evident from the chart below:

Factors at Play

Will Affiliated Managers be able to sustain its earnings streak this time? Or will a tough industry backdrop hurt the bottom line? Let’s check the factors that are expected to influence Q3 results.

Affiliated Managers holds an almost unbeaten track record of buying equity interests in asset management companies with strong performance-oriented products. Hence, we believe that the past equity investments should continue to boost the company’s top line, driven by the excellent long-term performance of its affiliates.

Also, management expects the ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) contribution to the end-of-period AUM for the third quarter of 2016 to be around 13.1 basis points, reflecting lower performance fees. Also, the company projects other economic items to be around $1 million per quarter.

On the cost front, management projects total interest expenses to be $24 million in the third quarter, up sequentially. The increase is expected due to the higher revolver balance from the closing of Capula.

Further, the company expects amortization expenses to be $35 million, a marginal decline from the second-quarter 2016 level. Additionally, intangible-related deferred taxes are expected to be $21 million in the third quarter.

Earnings Whispers

Our proven model does not conclusively show that Affiliated Managers is likely to beat earnings in the third quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold) to have a significantly higher chance of beating earnings.

Zacks ESP: The Earnings ESP for Affiliated Managers is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $3.00. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Affiliated Managers’ Zacks Rank #3 increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

Stocks That Warrant a Look

Here are some stocks worth considering, as according to our model they have the right combination of elements to post an earnings beat this quarter.

PennyMac Financial Services, Inc. (PFSI Quick QuotePFSI - Free Report) is slated to release results on Nov 3. The company has an Earnings ESP of +6.82% and a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 stocks here.

CNA Financial Corporation (CNA Quick QuoteCNA - Free Report) has an Earnings ESP of +2.38% and a Zacks Rank #2. The company is slated to announce its results on Oct 31.

Ares Capital Corporation (ARCC Quick QuoteARCC - Free Report) is slated to release results on Nov 2. The company has an Earnings ESP of +2.63 % and a Zacks Rank #3.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>