Affiliated Managers (AMG) Q3 Earnings Beat As Revenues Rise

Affiliated Managers Group Inc. (NYSE:AMG) reported third-quarter 2017 economic earnings of $3.41 per share, outpacing the Zacks Consensus Estimate of $3.36. Also, earnings were up 12.2% year over year.

Higher revenues and a fall expenses primarily drove earnings. Also, the quarter witnessed solid growth in assets under management (AUM).

Affiliated Managers’ economic net income was $191.3 million, an increase of 15.6% from the prior-year quarter.

Revenues Rise, Expenses Decline

Total revenues grew 7.5% year over year to $585.7 million. However, the top line missed the Zacks Consensus Estimate of $590.4 million.

Earnings before interest, taxes, depreciation and amortization were $256.3 million, up 16.6% from the year-ago quarter.

Total operating expenses dipped 1.8% year over year to $366.9 million. The decline was primarily due to lower selling, general and administrative expenses, and compensation and related expenses.

As of Sep 30, 2017, total AUM grew 19.5% year over year to $803.7 billion. The quarter also witnessed net client cash inflow of $3.1 billion.

Capital Position Deteriorates, Liquidity Position Decent

As of Sep 30, 2017, Affiliated Managers had $374.7 million in cash and cash equivalents compared with $430.8 million as of Dec 31, 2016. Notably, the company had $868.9 million of senior bank debt compared with $868.6 million as of Dec 31, 2016.

Shareholders’ equity as of Sep 30, 2017, totaled $3.63 billion, up from $3.62 billion as of Dec 31, 2016.

Share Repurchases

During the reported quarter, the company repurchased $74 million worth of common stock.

Our Take

Affiliated Managers remains well positioned for future growth based on successful partnerships and global distribution capability, along with a diverse product mix. However, we remain concerned about the impact of increased debt levels and higher intangibles on its near-term profitability.

Currently, Affiliated Managers 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

The Blackstone Group L.P. (NYSE:BX) reported third-quarter 2017 economic net income of 69 cents per share, which beat the Zacks Consensus Estimate of 57 cents. Improvement in revenues largely boosted earnings. However, a rise in expenses was an undermining factor.

BlackRock, Inc. (NYSE:BLK) reported third-quarter 2017 adjusted earnings of $5.92 per share, which outpaced the Zacks Consensus Estimate of $5.59. Results benefited from improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.

Waddell & Reed Financial Inc.’s (NYSE:WDR) third-quarter 2017 earnings of 45 cents per share outpaced the Zacks Consensus Estimate of 40 cents. Higher gross sales and a decline in net outflows marginally supported the results. However, lower revenues and a rise in expenses were the undermining factors.

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