Because of significant market volatility, Affiliated Managers Group Inc.'s (AMG - Free Report) revenues remained under pressure over the past few years. Also, its exposure to high debt levels remains a major near-term concern.
The company’s price performance does not seem impressive either. Its shares have lost 11.3% so far this year compared with the 4.8% decline for its industry.
Moreover, its Zacks Consensus Estimate for the current-year earnings has been revised marginally downward over the last 60 days. This reflects that analysts are pessimistic regarding the company’s earnings growth potential. Thus, the stock currently carries a Zacks Rank #4 (Sell).
Looking at the fundamentals, while the company’s revenues improved in 2017, the same declined at a four-year (2014-2017) CAGR of 2.8%. Even though its portfolio of investment products provides it a competitive edge when it comes to fulfilling the diverse needs of clients, the current tough operating environment is making it difficult to increase revenues.
Moreover, the company uses a high level of debt to finance its operations. Such high levels of debt could limit its flexibility and restrict it from procuring additional finance for working capital, capital expenditures, acquisitions, debt service requirements or other purposes, thereby pushing it into a disadvantageous position.
While, the company remains well positioned for growth based on successful partnerships, a diverse product mix and initiatives undertaken to strengthen its retail market operations, the presence of various intangible assets on its balance sheet remains a concern. This is because these intangibles are subject to impairment. Once impaired, the value of these assets may have to be written down, which will adversely affect its financials.
Some Investment Management Stocks Worth a Look
Some better-ranked investment management firms include AllianceBernstein Holding L.P. (AB - Free Report) , Waddell & Reed Financial, Inc. (WDR - Free Report) and Legg Mason, Inc. (LM - Free Report) .
AllianceBernstein's earnings estimates for the current year have remained stable over the last 30 days. Its shares have increased nearly 18.1% in the past 12 months. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Waddell & Reed also has a Zacks Rank of 1. Its earnings estimates have remained stable for the current year over the last 30 days. Also, its shares have gained around 19.1% in the past year.
Legg Mason’s Zacks Consensus Estimate for the current fiscal year has remained stable over the past 30 days. In the past year, the company’s shares have gained 11.7%. It currently has a Zacks Rank #2 (Buy).
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