It has been about a month since the last earnings report for Affiliated Managers Group (AMG). Shares have lost about 13.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Affiliated Managers due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Affiliated Managers Q2 Earnings & Revenues Decline Y/Y, Costs Rise
Affiliated Managers’ second-quarter 2019 economic earnings of $3.33 per share declined 7.8% year over year. However, the figure beat the Zacks Consensus Estimate of $3.19.
Results were adversely impacted by a decline in revenues, fall in AUM balance and higher expenses. Nonetheless, robust liquidity position acted as a tailwind.
Economic net income was $170.1 million, down 13% from the prior-year quarter.
Revenues Down, Expenses Rise
Total revenues fell 1.4% year over year to $591.9 million. However, revenues beat the Zacks Consensus Estimate of $546.5 million.
Adjusted earnings before interest, taxes, depreciation and amortization were $219.3 million, down 10.9% from the year-ago quarter.
Total expenses increased 1.2% to $412.6 million. Higher compensation and related expenses, and net other expenses mainly led to the rise.
As of Jun 30, 2019, total AUM was $772.2 billion, down 6.3% year over year. Net outflows of $15.1 billion hurt AUM.
Capital & Liquidity Position Decent
As of Jun 30, 2019, Affiliated Managers had $360 million in cash and cash equivalents compared with $565.5 million as of Dec 31, 2018. Notably, the company had $1.79 billion of debt, down 2.1% from the Dec 31, 2018 level.
Shareholders’ equity as of Jun 30, 2019, was $3.23 billion, down from $3.46 billion as of Dec 31, 2018.
Share Repurchase Update
During the reported quarter, the company repurchased shares worth $50 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
Currently, Affiliated Managers has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Affiliated Managers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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