Affiliated Managers (AMG) Q1 Earnings Top On Higher Revenues

Affiliated Managers Group Inc. (NYSE:AMG) reported first-quarter 2018 economic earnings of $3.92 per share, outpacing the Zacks Consensus Estimate of $3.88. Also, earnings were up 22.1% year over year.

Shares of Affiliated Managers have lost nearly 4.7% in the pre-market trading, reflecting net outflows and sequential decline in assets under management (AUM). Notably, the full-day trading session will depict a better picture.

Rise in revenues and growth in AUM from the prior-year quarter benefited the results. However, higher operating expenses and outflows were the undermining factors.

Affiliated Managers’ economic net income was $215.2 million, an increase of 17.5% from the prior-year quarter.

Revenues & Expenses Rise

Total revenues grew 12.5% year over year to $612.4 million. Also, the top line beat the Zacks Consensus Estimate of $592.4 million.

Earnings before interest, taxes, depreciation and amortization were $286.5 million, up 17.5% from the year-ago quarter.

Total operating expenses increased 11.2% year over year to $435.4 million. The rise was primarily due to increase in all components except interest expenses.

As of Mar 31, 2018, total AUM was $830.9 billion, up 10.3% year over year but down nearly 1% sequentially. The quarter also witnessed net client cash outflow of $1.9 billion.

Capital & Liquidity Position Decent

As of Mar 31, 2018, Affiliated Managers had $334.2 million in cash and cash equivalents compared with $439.5 million as of Dec 31, 2017. Notably, the company had $1.56 billion of senior bank debt, relatively stable with the Dec 31, 2017 level.

Shareholders’ equity as of Mar 31, 2018, totaled $3.68 billion, down from $3.82 billion as of Dec 31, 2017.

Share Repurchase Update

During the reported quarter, the company repurchased 0.8 million shares for $151 million.

Our Take

Affiliated Managers remains well positioned for growth based on successful partnerships and global distribution capability, along with a diverse product mix. Given a solid liquidity position, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.

However, muted revenue growth owing to significant market volatility remains a major concern. Also, we remain concerned about the impact of increased debt levels and higher intangibles on its near-term profitability.

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 (NYSE:BLK) first-quarter 2018 adjusted earnings came in at $6.70 per share, which handily outpaced the Zacks Consensus Estimate of $6.42. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.

The Blackstone Group L.P. (NYSE:BX) reported first-quarter 2018 economic net income of 65 cents per share, which handily surpassed the Zacks Consensus Estimate of 46 cents. The quarter saw an improvement in AUM, mainly driven by inflows. However, lower revenues and a rise in expenses were the undermining factors.

Ameriprise Financial Inc.’s (NYSE:AMP) first-quarter 2018 adjusted operating earnings per share of $3.70 comfortably surpassed the Zacks Consensus Estimate of $3.47. Results benefited from an improvement in revenues. Also, growth in AUM and assets under administration supported earnings. However, a rise in expenses was an undermining factor.

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