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Affiliated Managers Group, Inc. (NYSE:AMG) investors will be delighted, with the company turning in some strong numbers with its latest results. Affiliated Managers Group beat earnings, with revenues hitting US$2.0b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 17%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Affiliated Managers Group's eight analysts is for revenues of US$2.22b in 2021, which would reflect a solid 9.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 55% to US$6.72. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.11b and earnings per share (EPS) of US$7.49 in 2021. So it's pretty clear the analysts have mixed opinions on Affiliated Managers Group after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.
Curiously, the consensus price target rose 23% to US$128. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Affiliated Managers Group, with the most bullish analyst valuing it at US$153 and the most bearish at US$78.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Affiliated Managers Group's past performance and to peers in the same industry. For example, we noticed that Affiliated Managers Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 9.3%, well above its historical decline of 2.0% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 6.1% next year. Not only are Affiliated Managers Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Affiliated Managers Group going out to 2023, and you can see them free on our platform here..
Even so, be aware that Affiliated Managers Group is showing 2 warning signs in our investment analysis , you should know about...
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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