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Are Investors Undervaluing Affiliated Managers Group (AMG) Right Now?

Zacks Equity Research

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on 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 is trading with a P/E ratio of 5.89, which compares to its industry's average of 13.46. AMG's Forward P/E has been as high as 7.94 and as low as 5.02, with a median of 6.16, all within the past year.

Investors should also note that AMG holds a PEG ratio of 0.59. 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 industry has an average PEG of 1.38 right now. Over the past 52 weeks, AMG's PEG has been as high as 0.83 and as low as 0.50, with a median of 0.61.

Investors should also recognize that AMG has a P/B ratio of 1.15. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. AMG's current P/B looks attractive when compared to its industry's average P/B of 1.84. Over the past 12 months, AMG's P/B has been as high as 1.57 and as low as 0.97, with a median of 1.19.

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 1.86. This compares to its industry's average P/S of 2.34.

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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