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What's in Store for Affiliated Managers (AMG) in Q1 Earnings?

Zacks Equity Research

Affiliated Managers Group Inc. AMG is slated to report first-quarter 2019 results on May 6, before the opening bell. Its earnings and revenues are projected to decline year over year.

In the last reported quarter, the company’s economic earnings outpaced the Zacks Consensus Estimate. Results were driven by a slight decline in expenses. However, lower revenues and decrease in assets under management (AUM) were the undermining factors.

Moreover, the company boasts an impressive earnings surprise history. Its earnings surpassed the consensus estimate in each of the trailing four quarters, the average beat being 0.8%.

Affiliated Managers Group, Inc. Price and EPS Surprise

Affiliated Managers Group, Inc. Price and EPS Surprise | Affiliated Managers Group, Inc. Quote

However, activities of the company during the first quarter failed to encourage analysts to revise earnings estimates upward. Thus, the Zacks Consensus Estimate for earnings of $3.27 for the to-be-reported quarter has remained unchanged over the past 30 days. Also, it reflects decline of 16.6% on a year-over-year basis.

The consensus estimate for sales is pegged at $535 million, indicating a fall of 12.6% from the year-ago quarter.

Factors to Impact Q1 Results

Affiliated Managers holds an almost unbeaten track record of buying equity interests in asset management companies, with strong performance-oriented products. The past equity investments are expected to support the company’s top line in the to-be-reported quarter as well.

Management expects the ratio of adjusted earnings before interest, taxes, depreciation and amortization to average AUM to be in the range of 11.3-11.7 basis points (bps) for the to-be-reported quarter. Further, other economic items are projected to be around $1 million.

On the cost front, management projects total interest expenses of around $18 million in the first quarter, marginally lower than the last reported quarter.

Also, the company’s share of amortization and impairments are expected to be $45 million, up from $38.3 million recorded in the prior quarter.

Is a Positive Surprise in Store?

Now, let’s check what our quantitative model predicts.

According to our quantitative model, chances of Affiliated Managers beating the Zacks Consensus Estimate in the first quarter are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Affiliated Managers is +0.45%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy). This, when combined with a positive ESP, makes us reasonably confident of an earnings beat.

Other Stocks That Warrant a Look

Here are some finance stocks that you may want to consider, as according to our model, these too have the right combination of elements to post an earnings beat this quarter.

Solar Capital Ltd. SLRC has an Earnings ESP of +4.07% and currently carries a Zacks Rank #2. The company is slated to release results on May 6.

Banco Macro S.A. BMA is expected to release results on May 21. It has an Earnings ESP of +0.49% and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Grupo Financiero Galicia S.A. GGAL is expected to release results on May 29. It presently has an Earnings ESP of +4.76% and a Zacks Rank #3.

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