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Is Affiliated Managers Group (AMG) a Good Pick for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Affiliated Managers Group, Inc. (AMG - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Affiliated Managers Group has a trailing twelve months PE ratio of 10.63, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 28.34. If we focus on the long-term PE trend, Affiliated Managers Group’s current PE level puts it above its midpoint (which is 9.49) over the past five years, with the number having risen rapidly over the past few months.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the Zacks Finance sector’s trailing twelve months PE ratio, which stands at 18.9. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Affiliated Managers Group has a forward PE ratio (price relative to this year’s earnings) of just 9.35, so it is fair to say that a slightly more value-oriented path may be ahead for Affiliated Managers Group stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Affiliated Managers Group has a P/S ratio of about 3.37. This is a bit lower than the S&P 500 average, which comes in at 5.3x right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Image Source: Zacks Investment Research
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Affiliated Managers Group currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Affiliated Managers Group a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Affiliated Managers Group is just 0.57, a level that is far lower than the industry average of 0.76. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, AMG is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Affiliated Managers Group might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of C and a Momentum Score of D. This gives AMG a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been robust at best. The current year has seen three estimates go higher in the past sixty days compared to none lower, while the next year estimate has seen two up and one down in the same time period.
This has had a noticeable impact on the consensus estimate though as the current year consensus estimate has risen by 1% in the past two months, while the next year estimate has inched higher by 0.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Affiliated Managers Group, Inc. Price and Consensus
Despite this positive trend, the stock has a Zacks Rank #3 (Hold), which indicates expectations of in-line performance from the company in the near term.
Bottom Line
Affiliated Managers Group is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Further, a strong industry rank (among Top 45% of more than 250 industries) instills our confidence. In fact, over the past two years, the Zacks Financial - Investment Management industry has clearly outperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Is Affiliated Managers Group (AMG) a Good Pick for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Affiliated Managers Group, Inc. (AMG - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Affiliated Managers Group has a trailing twelve months PE ratio of 10.63, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 28.34. If we focus on the long-term PE trend, Affiliated Managers Group’s current PE level puts it above its midpoint (which is 9.49) over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks Finance sector’s trailing twelve months PE ratio, which stands at 18.9. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Affiliated Managers Group has a forward PE ratio (price relative to this year’s earnings) of just 9.35, so it is fair to say that a slightly more value-oriented path may be ahead for Affiliated Managers Group stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Affiliated Managers Group has a P/S ratio of about 3.37. This is a bit lower than the S&P 500 average, which comes in at 5.3x right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Affiliated Managers Group currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Affiliated Managers Group a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Affiliated Managers Group is just 0.57, a level that is far lower than the industry average of 0.76. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, AMG is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Affiliated Managers Group might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of C and a Momentum Score of D. This gives AMG a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been robust at best. The current year has seen three estimates go higher in the past sixty days compared to none lower, while the next year estimate has seen two up and one down in the same time period.
This has had a noticeable impact on the consensus estimate though as the current year consensus estimate has risen by 1% in the past two months, while the next year estimate has inched higher by 0.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Affiliated Managers Group, Inc. Price and Consensus
Affiliated Managers Group, Inc. price-consensus-chart | Affiliated Managers Group, Inc. Quote
Despite this positive trend, the stock has a Zacks Rank #3 (Hold), which indicates expectations of in-line performance from the company in the near term.
Bottom Line
Affiliated Managers Group is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Further, a strong industry rank (among Top 45% of more than 250 industries) instills our confidence. In fact, over the past two years, the Zacks Financial - Investment Management industry has clearly outperformed the broader market, as you can see below:
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>