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Why Affiliated Managers (AMG) Might be Well Poised for a Surge

Affiliated Managers Group (AMG) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.

Analysts' growing optimism on the earnings prospects of this asset manager is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Affiliated Managers, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $6.82 per share for the current quarter, which represents a year-over-year change of +11.8%.

The Zacks Consensus Estimate for Affiliated Managers has increased 21.64% over the last 30 days, as four estimates have gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $19.70 per share represents a change of +7.77% from the year-ago number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, five estimates have moved up for Affiliated Managers versus no negative revisions. This has pushed the consensus estimate 8.45% higher.

Favorable Zacks Rank

Thanks to promising estimate revisions, Affiliated Managers currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for Affiliated Managers have attracted decent investments and pushed the stock 23.4% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.

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Affiliated Managers Group, Inc. (AMG) : Free Stock Analysis Report

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Zacks Investment Research