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

Zacks Equity Research
BGC Partners (BGCP) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 to watch right now is Affiliated Managers Group (AMG). AMG is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.69 right now. For comparison, its industry sports an average P/E of 12.16. Over the past year, AMG's Forward P/E has been as high as 9.90 and as low as 5.78, with a median of 7.78.

Investors should also note that AMG holds a PEG ratio of 0.69. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AMG's PEG compares to its industry's average PEG of 1.65. Over the last 12 months, 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 1.40. 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 1.72. Within the past 52 weeks, AMG's P/B has been as high as 2.13 and as low as 1.10, with a median of 1.52.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 2.43. This compares to its industry's average P/S of 2.85.

These are only a few of the key metrics included in Affiliated Managers Group's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AMG looks like an impressive value stock at the moment.


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