Affiliated Managers Group Inc.’s AMG fourth-quarter 2018 economic earnings of $3.53 per share outpaced the Zacks Consensus Estimate of $3.51. However, the figure was down 24.6% year over year.
Slight fall in expenses supported the results. Also, the liquidity position remained strong. However, lower revenues and decline in assets under management (AUM) were the undermining factor.
Affiliated Managers’ economic net income was $185.8 million, witnessing a decline of 28.9% from the prior-year quarter.
For 2018, economic earnings of $14.50 per share lagged the Zacks Consensus Estimate of by a penny. Also, it was nearly 1% down on a year-over-year basis. Economic net income was $824.4 million, witnessing a fall of 5.3%.
Revenues & Expenses Down
Total revenues for the reported quarter fell 6.6% year over year to $564.4 million. However, the top line beat the Zacks Consensus Estimate of $555.9 million.
For 2018, total revenues increased 3.2% year over year to $2.38 billion. Also, itsurpassed the Zacks Consensus Estimate of $2.36 billion.
Adjusted earnings before interest, taxes, depreciation and amortization were $191.3 million, plunging47.1% from the year-ago quarter.
Total operating expenses decreased marginally year over year to $427.3 million. Rise in compensation and related expenseswas offset by lower net other expenses.
As of Dec 31, 2018, total AUM was $736 billion, down 12% year over year. Net outflows of $12.5 billion and market depreciation hurt AUM.
Capital & Liquidity Position Decent
As of Dec 31, 2018, Affiliated Managers had $565.5 million in cash and cash equivalents compared with $439.5 million as of Dec 31, 2017. Notably, the company had $1.52 billion of senior bank debt, down 1.8% from the Dec 31, 2017 level.
Shareholders’ equity as of Dec 31, 2018, was $3.46 billion, down from $3.82 billion as of Dec 31, 2017.
Capital Deployment Updates
During the reported quarter, the company repurchased shares worth $75.5 million.
Concurrently, Affiliated Managers announced a quarterly dividend of 32 cents per share, representing a hike of 7% from the prior payout. The dividend will be paid on Mar 1 to shareholder on record as of Feb 14.
Additionally, Affiliated Managers increased the share buyback authorization to 5 million shares.
Our Take
Affiliated Managers’ muted revenue growth, owing to significant market volatility, remains a major concern. Further, the company has substantial intangible assets that may require impairment, which consequently will have an adverse impact on its financials.
Nevertheless, it is well positioned for growth, based on successful partnerships and global distribution capability along with a diverse product mix. Moreover, improving AUM will likely support top-line growth.
Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise
Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise | Affiliated Managers Group, Inc. Quote
Affiliated Managers currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock’s BLK fourth-quarter 2018 adjusted earnings of $6.08 per share missed the Zacks Consensus Estimate of $6.39. Further, the bottom line came in 2% lower than the year-ago figure.
Federated Investors, Inc. FII delivered a positive earnings surprise of 1.7% in fourth-quarter 2018. Earnings per share of 61 cents surpassed the Zacks Consensus Estimate of 60 cents. However, the figure compares unfavorably with the prior-year quarter earnings of $1.31.
Invesco IVZ reported fourth-quarter 2018 adjusted earnings of 44 cents per share, lagging the Zacks Consensus Estimate of 56 cents. Also, the figure was 39.7% below the prior-year quarter level.
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