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Is Affiliated Managers Group (AMG) Stock Undervalued Right Now?

Zacks Equity Research
Atkore International Group Inc. (ATKR) might move higher on growing optimism about its earnings prospects, which is reflected by its upgrade to a Zacks Rank 2 (Buy).

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Affiliated Managers Group (AMG). AMG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.37, while its industry has an average P/E of 11.97. AMG's Forward P/E has been as high as 10.54 and as low as 5.78, with a median of 8.15, all within the past year.

Investors should also note that AMG holds a PEG ratio of 0.64. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AMG's PEG compares to its industry's average PEG of 1.68. Over the past 52 weeks, AMG's PEG has been as high as 0.83 and as low as 0.52, with a median of 0.66.

Investors should also recognize that AMG has a P/B ratio of 1.36. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.68. Within the past 52 weeks, AMG's P/B has been as high as 2.30 and as low as 1.10, with a median of 1.72.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AMG has a P/S ratio of 2.44. This compares to its industry's average P/S of 2.64.

Value investors will likely look at more than just these metrics, but the above data helps show that Affiliated Managers Group is likely undervalued currently. And when considering the strength of its earnings outlook, AMG sticks out at as one of the market's strongest value stocks.


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