With EPS Growth And More, Affiliated Managers Group (NYSE:AMG) Makes An Interesting Case
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like Affiliated Managers Group (NYSE:AMG), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Affiliated Managers Group with the means to add long-term value to shareholders.
View our latest analysis for Affiliated Managers Group
Affiliated Managers Group's Improving Profits
Over the last three years, Affiliated Managers Group has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. Impressively, Affiliated Managers Group's EPS catapulted from US$13.78 to US$31.42, over the last year. It's not often a company can achieve year-on-year growth of 128%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. To cut to the chase Affiliated Managers Group's EBIT margins dropped last year, and so did its revenue. Shareholders will be hoping for a change in fortunes if they're looking for profit growth.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Affiliated Managers Group's forecast profits?
Are Affiliated Managers Group Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
First and foremost; there we saw no insiders sell Affiliated Managers Group shares in the last year. Even better, though, is that the Independent Director, Reuben Jeffery, bought a whopping US$501k worth of shares, paying about US$137 per share, on average. Big buys like that may signal an opportunity; actions speak louder than words.
On top of the insider buying, it's good to see that Affiliated Managers Group insiders have a valuable investment in the business. Given insiders own a significant chunk of shares, currently valued at US$79m, they have plenty of motivation to push the business to succeed. This would indicate that the goals of shareholders and management are one and the same.
Does Affiliated Managers Group Deserve A Spot On Your Watchlist?
Affiliated Managers Group's earnings per share growth have been climbing higher at an appreciable rate. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Affiliated Managers Group deserves timely attention. Even so, be aware that Affiliated Managers Group is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Affiliated Managers Group, you'll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
