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Affiliated Managers (AMG) Q4 Earnings: A Beat in Store?
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We expect Affiliated Managers Group Inc. (AMG - Free Report) to beat earnings expectations when it reports its fourth quarter and 2016 results before the opening bell on Jan 30.
Last quarter, the company’s earnings outpaced the Zacks Consensus Estimate. Results reflected lower operating expenses, partially offset by a fall in revenues.
Despite an earnings beat and the Trump-induced rally, Affiliated Managers’ price performance was disappointing. For the quarter-ended Dec 31, 2016, the company witnessed a marginal fall in share prices.
Notably, the Zacks Consensus Estimate of $3.69 declined a penny in the last 30 days. Affiliated Managers boasts a decent earnings surprise history, as evident from the chart below:
Affiliated Managers Group, Inc. Price and EPS Surprise
Our proven model indicates that the chances of Affiliated Managers beating the Zacks Consensus Estimate in the fourth quarter are very high. This is because a stock has both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold).
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Affiliated Managers is +0.81%. This is because the Most Accurate estimate of $3.72 is above the Zacks Consensus Estimate of $3.69.
Zacks Rank: Affiliated Managers’ Zacks Rank #3 further increases the predictive power of ESP.
What’s Driving the Better-than-Expected Results?
Will Affiliated Managers be able to sustain its earnings streak this time? Let’s check the factors that are expected to influence Q4 results.
Affiliated Managers holds an almost unbeaten track record of buying equity interests in asset management companies with strong performance-oriented products. Hence, we believe that the past equity investments should continue to boost the company’s top line, driven by the excellent long-term performance of its affiliates.
Further, management expects growth in the existing alternative products along with the addition of new products to aid performance fee to grow modestly.
Also, management expects the ratio of earnings before interest, taxes, depreciation and amortization contribution to the end-of-period AUM (assets under management) for the quarter to be around 16 basis points, reflecting higher performance fees (owing to seasonality). Also, the company projects other economic items to be around $1 million per quarter.
On the cost front, management projects total interest expenses to be $22 million in the fourth quarter, up sequentially. Further, the company expects amortization expenses to be $37 million, up marginally on a sequential basis. Additionally, intangible-related deferred taxes are expected to be $21 million in the quarter.
Management projects economic net income to be in the range of $12.30–$13.30 per share for 2016, considering actual market performance as of Oct 31, 2016 and assuming a modest quarterly market growth for the fourth quarter.
Other Stocks that Warrant a Look
Here are some other stocks worth considering, as according to our model they have the right combination of elements to post an earnings beat this quarter.
Evercore Partners Inc. (EVR - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #3. The company is slated to announce its results on Feb 1.
LPL Financial Holdings Inc. (LPLA - Free Report) is slated to release results on Feb 9. The company has an Earnings ESP of +2.78 % and a Zacks Rank #2.
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Affiliated Managers (AMG) Q4 Earnings: A Beat in Store?
We expect Affiliated Managers Group Inc. (AMG - Free Report) to beat earnings expectations when it reports its fourth quarter and 2016 results before the opening bell on Jan 30.
Last quarter, the company’s earnings outpaced the Zacks Consensus Estimate. Results reflected lower operating expenses, partially offset by a fall in revenues.
Despite an earnings beat and the Trump-induced rally, Affiliated Managers’ price performance was disappointing. For the quarter-ended Dec 31, 2016, the company witnessed a marginal fall in share prices.
Notably, the Zacks Consensus Estimate of $3.69 declined a penny in the last 30 days. Affiliated Managers boasts a decent earnings surprise history, as evident from the chart below:
Affiliated Managers Group, Inc. Price and EPS Surprise
Affiliated Managers Group, Inc. Price and EPS Surprise | Affiliated Managers Group, Inc. Quote
Why a Likely Positive Surprise?
Our proven model indicates that the chances of Affiliated Managers beating the Zacks Consensus Estimate in the fourth quarter are very high. This is because a stock has both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold).
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Affiliated Managers is +0.81%. This is because the Most Accurate estimate of $3.72 is above the Zacks Consensus Estimate of $3.69.
Zacks Rank: Affiliated Managers’ Zacks Rank #3 further increases the predictive power of ESP.
What’s Driving the Better-than-Expected Results?
Will Affiliated Managers be able to sustain its earnings streak this time? Let’s check the factors that are expected to influence Q4 results.
Affiliated Managers holds an almost unbeaten track record of buying equity interests in asset management companies with strong performance-oriented products. Hence, we believe that the past equity investments should continue to boost the company’s top line, driven by the excellent long-term performance of its affiliates.
Further, management expects growth in the existing alternative products along with the addition of new products to aid performance fee to grow modestly.
Also, management expects the ratio of earnings before interest, taxes, depreciation and amortization contribution to the end-of-period AUM (assets under management) for the quarter to be around 16 basis points, reflecting higher performance fees (owing to seasonality). Also, the company projects other economic items to be around $1 million per quarter.
On the cost front, management projects total interest expenses to be $22 million in the fourth quarter, up sequentially. Further, the company expects amortization expenses to be $37 million, up marginally on a sequential basis. Additionally, intangible-related deferred taxes are expected to be $21 million in the quarter.
Management projects economic net income to be in the range of $12.30–$13.30 per share for 2016, considering actual market performance as of Oct 31, 2016 and assuming a modest quarterly market growth for the fourth quarter.
Other Stocks that Warrant a Look
Here are some other stocks worth considering, as according to our model they have the right combination of elements to post an earnings beat this quarter.
Heartland Financial USA, Inc. (HTLF - Free Report) is slated to release results on Jan 30. The company has an Earnings ESP of +1.33% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evercore Partners Inc. (EVR - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #3. The company is slated to announce its results on Feb 1.
LPL Financial Holdings Inc. (LPLA - Free Report) is slated to release results on Feb 9. The company has an Earnings ESP of +2.78 % and a Zacks Rank #2.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>