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Affiliated Managers' (AMG) Q4 Earnings Beat, Revenues Fall

Zacks Equity Research

Affiliated Managers Group Inc.’s AMG fourth-quarter 2019 economic earnings of $4.52 per share surpassed the Zacks Consensus Estimate of $4.03. Also, the bottom line grew 28% year over year.

Results benefited from higher adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and robust liquidity position. However, lower revenues, fall in assets under management (AUM) balance and rise in expenses were the undermining factors.

Economic net income was $221.8 million, up 19.4% from the prior-year quarter.

In 2019, economic earnings were $14.22 per share, down 1.9% year over year. However, the figure beat the consensus estimate of $13.77. Economic net income declined 7.7% to $720.2 million.

Revenues & AUM Down, Expenses Rise

Total revenues for the quarter fell 1.6% year over year to $555.5 million. However, the top line beat the Zacks Consensus Estimate of $537.6 million.

In 2019, total revenues were $2.34 billion, down 5.8%. The figure outpaced the consensus estimate of $2.22 billion.

Adjusted EBITDA was $200.3 million, up 4.7% from the year-ago quarter.

Total expenses increased 4.1% to $445 million. Rise in compensation and related expenses, and intangible amortization and impairments primarily led to the increase.

As of Dec 31, 2019, total AUM was $722.5 billion, down 1.8% year over year. Net outflows of $11.3 billion hurt AUM.

Capital & Liquidity Position Decent

As of Dec 31, 2019, Affiliated Managers had $539.6 million in cash and cash equivalents compared with $565.5 million as of Dec 31, 2018. The company had $1.79 billion of debt, down 2% from the Dec 31, 2018 level.

Shareholders’ equity as of Dec 31, 2019, was $2.94 billion, down from $3.46 billion as of Dec 31, 2018.

Share Repurchase Update

During the fourth quarter, the company repurchased shares worth $110 million.

Our Take

Affiliated Managers’ muted revenue growth remains a major concern. Nevertheless, it is well positioned for growth, based on successful partnerships and global distribution capability along with a diverse product mix.

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

 

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

Affiliated Managers Group, Inc. price-consensus-eps-surprise-chart | Affiliated Managers Group, Inc. Quote

Affiliated Managers currently 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

Invesco IVZ reported fourth-quarter 2019 adjusted earnings of 64 cents per share, missing the Zacks Consensus Estimate of 70 cents. However, the bottom line surged 45.5% from the prior-year quarter.

BlackRock, Inc.’s BLK fourth-quarter 2019 adjusted earnings of $8.34 per share surpassed the Zacks Consensus Estimate of $7.67. Moreover, the figure was 37.2% higher than the year-ago quarter’s number.

Cohen & Steers’ CNS fourth-quarter 2019 adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 67 cents. Also, the bottom line was 32.1% higher than the year-ago quarter figure.

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