On Sep 19, 2014, we issued an updated research report on Affiliated Managers Group Inc. (AMG). Commendable top line growth remains the key strength while escalating expenses continue to be a concern.
Affiliated Managers with its diversified investment products and a goal to fulfill the varied needs of clients seems to capitalize on available opportunities and pave the way for growth. The global asset management firm’s consistent efforts for revenue generation were reflected in the 18% rise in revenues in the first half of 2014.
Moreover, the company has been seeking opportunities to acquire interests in high quality boutique investment management firms, expressing its focus on expansion and development. The continuous profitable investments made by the company to enhance footprint will continue to boost growth going forward.
On the flip side, the constantly mounting expenses remain a challenge for Affiliated Managers. The first half of 2014 recorded a 14% increase in operating expenses, highlighting the need for better expense management. Also, the company’s inclination towards acquisitions is bound to further elevate costs, keeping the top line under pressure.
Moreover, despite healthy liquidity level and steady assets under management, Affiliated Managers has been unsuccessful in gaining investors’ confidence. The uncertainty in the market regarding the company’s future performance due to its high debt level and vulnerability to unfavorable economic and industry conditions is evident from the 7.2% year-to-date decline in the share price.
This can also be observed in the Zacks Consensus Estimate for 2014 and 2015, which remained flat over the last 30 days.
Currently, Affiliated Managers carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked finance stocks include AllianceBernstein Holding L.P. (AB), Monroe Capital Corporation (MRCC) and Northrim Bancorp Inc. (NRIM). All these stocks sport a Zacks Rank #1 (Strong Buy).
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