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Affiliated Managers' (AMG) Q3 Earnings: What's in Store?

Affiliated Managers Group Inc. AMG is scheduled to report third-quarter 2017 results before the opening bell on Oct 30. Its earnings and revenues are projected to grow year over year.

Last quarter, the company’s earnings outpaced the Zacks Consensus Estimate. Higher revenues and a marginal decrease in expenses primarily drove results. 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 1.9%.

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 $3.36 per share has increased 1.2% over the last 30 days. The figure reflects year-over-year improvement of 11.4%.

For the quarter to be reported, the Zacks Consensus Estimate for sales is $590.4 million. This indicates growth of 8.4% year over year.

Driven by strong fundamentals and positive earnings surprises, shares of the company have gained 31.5% so far this year, outperforming the 25.9% growth of the industry it belongs to.

Will the rally in stock price continue post Q3 earnings? It depends on the company’s ability to impress the market with an earnings beat and improved financials.

According to our quantitative model, it cannot be conclusively predicted if Affiliated Managers will be able to beat the Zacks Consensus Estimate this time around. This is because it does not have 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 0.00%. This is because the Most Accurate estimate matches the Zacks Consensus Estimate.

Zacks Rank: Affiliated Managers has a Zacks Rank #3, which increases the predictive power of ESP. However, a positive ESP is needed to be confident of an earnings beat.

Factors to Influence Q3 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 should continue to give a boost to 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 1-3 cents per share.

Management expects the ratio of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to average AUM to be roughly 12.7 basis points (bps) for the 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 $21 million in the third quarter, down sequentially. Amortization expenses are projected to be $41 million, almost in line on a sequential basis.

Stocks that Warrant a Look

Here are a few 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.

Boston Properties, Inc. BXP is scheduled to release results on Nov 1. It has an Earnings ESP of +0.50% and a Zacks Rank of 3.

Credicorp Ltd. BAP is expected to release results on Nov 2. It has an Earnings ESP of +0.19% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eaton Vance Corp. EV has an Earnings ESP of +0.57% and a Zacks Rank #3. The company is slated to release its results on Nov 21.

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