Associated managers (AMG) an increase of 1.2% from the last report on earnings: can this be like that?

About a month has passed since the last Affilated Managers Group (AMG) earnings. Actions increased by about 1.2%at that time, achieving better results than the S&P 500.

Will the recent positive trend continue leading up to the next earnings release, or will affiliate managers see a decline? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

Earnings of managers associated in the first quarter outweigh the estimates, AUM growth

The associated managers’ first-quarter 2021 earnings of $4.28 per share exceeded the Zacks Consensus Estimate of $4.26. In addition, the financial result increased by 34.5% year -on -year.

The results reflect improved revenues and an increase in assets under management (AUM). Moreover, the company had a solid liquidity situation. However, higher operating costs were an obstacle.

The economic net profit was $ 184.8 million, which means an increase of 22.1% compared to the quarter of the previous year.

Increase in revenues and AUM, increase in expenses

Total revenues increased by 10.2% year on year, to USD 559.1 million. What’s more, the upper result was exceeded by Zacks’s consensus, which estimated at $ 554.6 million.

The corrected EBITDA amounted to $ 246.8 million, which is an increase of 23.2% compared to the same quarter of last year.

Total expenses increased by 6.8% to $ 378.5 million. Higher costs of salaries and related costs as well as interest costs contributed to the increase.

As at March 31, 2021, the total AUM assets amounted to $ 738 billion, which means an increase of 23.2% year -on -year. Net cash outflows from customers in the amount of $ 7.5 billion in this quarter Aum harmed.

Capital and liquidity position at a decent level

As of March 31, 2021, affiliated managers had $766.2 billion in cash and cash equivalents, compared to $1.04 billion as of December 31, 2020. The company had $2.30 billion in debt, which was down slightly from its December 31, 2020 level.

Equity at March 31, 2021 was $2.7 billion compared to $2.8 billion at December 31, 2020.

Share an update on the buyback

In the first quarter, the company repurchased shares worth almost $210 million.

Forecasts for the second quarter of 2021

Management expects adjusted EBITDA in the range of $210-220 million based on current AUM levels. The performance fee is expected to be $10 million and will include investments in OCP Asia and Boston Common.

Interest costs are expected to be $ 27 million and will be relatively stable compared to the previous quarter. The control interest rates are expected to remain at USD 2 million from the first quarter of 2021.

It is expected that the company’s share in the shown depreciation and loss of value will be around $ 35 million, which means a 15%decrease. It is expected that the related intangible and legal values ​​deferred taxes will amount to almost $ 11 million.

Other economic items (excluding market impact) are expected to be $1 million.

The adjusted weighted average share value is estimated at $42.4 million.

The GAAP tax rate is expected to be 24%. Additionally, the cash tax rate is expected to be 20%.

Outlook for 2021

EPS is expected to be $15.50 to $17.00 and adjusted EBITDA is expected to be $875 million to $940 million. The company expects performance remuneration to account for nearly 10% of profits.

The adjusted weighted average share outstanding is estimated at $41.5 million, representing $500 million of excess capital returned through share repurchases.

How have estimates changed since then?

Over the last month, investors have witnessed an upward trend in estimate revisions.

VGM results

Affiliated Managers currently has an average Growth Score of C, although it lags slightly behind its Momentum Score of D. However, the stock is rated an A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. It is worth noting that associations managers are rank by Zacks No. 3 (maintain). We expect a linear rate of return on the stock over the next few months.

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