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Affiliated Managers (AMG) Q2 Earnings Beat as Revenues Rise

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Affiliated Managers Group Inc. (AMG - Free Report) reported second-quarter 2017 economic earnings of $3.33 per share, outpacing the Zacks Consensus Estimate of $3.24. Also, earnings were up 8.5% year over year.

Higher revenues and a marginal decrease in expenses primarily drove earnings. Also, the quarter witnessed strong growth in assets under management (AUM).

Affiliated Managers’ economic net income was $188.7 million, an increase of 13% from the prior-year quarter.

Revenues Rise, Expenses Decline

Total revenue grew 3% year over year to $570.9 million. However, the top line missed the Zacks Consensus Estimate of $571.8 million.

Earnings before interest, taxes, depreciation and amortization were $254.8 million, up 16% from the year-ago quarter.

Total operating expenses dipped marginally year over year to $370 million. The decline was primarily due to lower selling, general and administrative expenses and intangible amortization and impairment costs.

As of Jun 30, 2017, total AUM grew 19% year over year to $772.1 billion. The quarter witnessed net client cash inflow of $1.8 billion.

Capital Position Deteriorates, Liquidity Position Decent

As of Jun 30, 2017, Affiliated Managers had $364.6 million in cash and cash equivalents compared with $430.8 million as of Dec 31, 2016. Notably, the company had $788.8 million of senior bank debt compared with $868.6 million as of Dec 31, 2016.

Shareholders’ equity as of Jun 30, 2017, totaled $3.60 billion, down from $3.62 billion as of Dec 31, 2016.

Share Repurchases

During the reported quarter, the company repurchased $120 million worth of common stock.

Our Take

Affiliated Managers remains well positioned for future growth based on successful partnerships and global distribution capability, along with a diverse product mix. Also, a strong balance sheet position helped it initiate dividend payments, which should boost investors’ confidence in the stock. However, we remain concerned about the impact of increased debt levels and higher intangibles on its near-term profitability.

Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise

 

Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise | Affiliated Managers Group, Inc. Quote

Currently, Affiliated Managers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

BlackRock, Inc.’s (BLK - Free Report) second-quarter 2017 adjusted earnings of $5.24 per share lagged the Zacks Consensus Estimate of $5.39. Results were adversely impacted primarily by a rise in operating expenses and lower investment advisory performance fees. However, increase in investment advisory, administration fees and securities lending revenues, along with growth in assets under management acted as tailwinds.

The Blackstone Group L.P. (BX - Free Report) reported second-quarter 2017 economic net income of 59 cents per share, which lagged the Zacks Consensus Estimate of 62 cents. An increase in expenses was the primary reason for the lower-than-expected results. However, the quarter witnessed a rise in revenues.

Ameriprise Financial Inc.’s (AMP - Free Report) second-quarter 2017 operating earnings per share of $2.80 comfortably surpassed the Zacks Consensus Estimate of $2.62. Results benefitted from a rise in revenues along with lower expenses. Also, growth in AUM and assets under administration were on the positive side.

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