Affiliated Managers Group has had an impressive run over the past six months as its shares have beaten the S&P 500 by 12.2%. The stock now trades at $355.47, marking a 23.6% gain. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Following the strength, is AMG a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Are We Positive on AMG?
Using a partnership approach that preserves entrepreneurial culture at its portfolio companies, Affiliated Managers Group (NYSE: AMG) is an investment firm that acquires stakes in boutique asset management companies while allowing them to maintain operational independence.
1. EPS Increasing Steadily
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Affiliated Managers Group’s EPS grew at 15.2% compounded annual growth rate over the last five years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.
2. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for financial firms. Over a long period, financial firms with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.
Over the last five years, Affiliated Managers Group has averaged an ROE of 21.5%, excellent for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Affiliated Managers Group has a strong competitive moat.
Final Judgment
These are just a few reasons Affiliated Managers Group is a rock-solid business worth owning, and with its shares topping the market in recent months, the stock trades at 9.2× forward P/E (or $355.47 per share). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free.
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