Affiliated Managers' (AMG) Q4 Earnings: Is A Beat In Store?

Affiliated Managers Group Inc. (NYSE:AMG) is scheduled to report fourth-quarter and 2017 results before the opening bell on Jan 29. Its quarterly earnings and revenues are projected to grow year over year.

Last quarter, the company’s earnings outpaced the Zacks Consensus Estimate driven by higher revenues and a slight fall in expenses. Also, assets under management (AUM) growth remained strong.

Moreover, the company boasts an impressive earning surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 2.1%.

Affiliated Managers Group, Inc. Price and EPS Surprise

Affiliated Managers Group, Inc. Price and EPS Surprise | Affiliated Managers Group, Inc. Quote

Also, activities of the company in the third quarter encouraged analysts to revise estimates upward. As a result, the Zacks Consensus Estimate for earnings of $4.53 has increased nearly 1% over the last 30 days. The figure reflects year-over-year improvement of 19.2%.

For the quarter to be reported, the Zacks Consensus Estimate for sales is $604.2 million. This indicates growth of 9.8% year over year.

A Likely Positive Surprise?

According to our quantitative model, chances of Affiliated Managers beating the Zacks Consensus Estimate are high this time around. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.

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 +0.24%.

Zacks Rank: Affiliated Managers has a Zacks Rank #2 (Buy), which further increases the predictive power of ESP.

Factors 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. The past equity investments are expected to continue boosting the company’s top line, driven by the excellent long-term performance of its affiliates.

The company expects performance fees in the quarter to be in the range of 70 cents to $1.20 per share.

Management expects the ratio of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to average AUM to be in the 16-18 basis points range for the to-be-reported quarter. Further, other economic items are projected to be around $1 million per quarter.

On the cost front, management projects total interest expenses of around $19.5 million in the fourth quarter, down sequentially. Amortization expenses are projected to be $42 million, almost in line on a sequential basis.

Moreover, for 2017, management expects economic earnings per share to be in the range of $13.75 to $15.75. This is based on assumptions of market performance till Jan 27, 2017, 2% quarterly market growth beginning second-quarter 2017, performance fee contribution of 13% and share repurchase plan.

Other Stocks That Warrant a Look

Here are a few other finance stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

T. Rowe Price Group (NASDAQ:TROW) has an Earnings ESP of +1.67% and carries a Zacks Rank #2. It is scheduled to report results on Jan 30.

Apollo Global Management, LLC (NYSE:APO) is slated to report results on Feb 1. It has an Earnings ESP of +4.30% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eaton Vance Corp. (NYSE:EV) has an Earnings ESP of +0.64% and a Zacks Rank #1. The company is expected to release its results on Feb 28.

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