Affiliated Managers Group Inc.
) gained nearly 8.5% after it announced first-quarter 2014
economic net income (ENI) of $2.48 per share, which easily beat
the Zacks Consensus Estimate of $2.37. The reported figure also
compared favorably with ENI of $2.27 in the year-ago quarter.
Our quantitative model had also conclusively projected that
Affiliated Managers would beat the Zacks Consensus Estimate, as
it had the right combination of two key components - a positive
and a Zacks Rank #2 (Buy).
Better-than-expected results benefited from top-line growth,
partly offset by a persistent rise in operating expenses.
Moreover, continued improvement in assets under management (AUM)
and a strong balance sheet were the tailwinds.
Affiliated Managers' ENI came in at $137.9 million, up 11% year
Affiliated Managers' total revenue increased 7% year over year to
$593.1 million. However, it lagged the Zacks Consensus Estimate
of $620.0 million.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) were $191.9 million, rising 10% from the year-ago
Total operating expenses climbed 14% year over year to $399.1
million. A rise in all operating expense components, except
intangible amortization and impairments charges, was the
primarily reason for the increase.
As of Mar 31, 2014, total AUM was $556.8 billion, up 28% year
over year. This reflected net client cash flow of $7.0 billion.
Capital and Liquidity
As of Mar 31, 2014, Affiliated Managers had $747.1 million in
cash and cash equivalents as compared with $469.6 million as of
Dec 31, 2013. Moreover, the company had $400.0 million of senior
bank debt at the quarter-end versus $525.0 million as of Dec 31,
Furthermore, shareholders' equity came in at $2.4 billion, up
from $2.1 billion as of Dec 31, 2013.
Along with the earnings release, Affiliated Managers announced a
deal to acquire a majority stake in Veritas Asset Management LLP.
With offices in London and Hong Kong, Veritas manages
approximately £10 billion ($17 billion) for institutional and
retail investors in the U.K. and worldwide.
In March, Affiliated Managers completed its investment in
SouthernSun Asset Management, LLC. The deal was announced in Dec
Further, in March, Affiliated Managers announced two major deals
to take forward its strategy of increasing market share and
providing best-in class investment ideas to clients. Of the two
transactions, one was Affiliated Managers' agreement with Aviva
Investors North America Holdings, Inc. to acquire full equity
interest in River Road Asset Management, LLC. The second deal
pertained to Affiliated Managers acquisition of minority stake in
WA-based EIG Global Energy Partners, LLC.
Affiliated Managers is expected to benefit from increased
investments in the near term. Moreover, the growing need for risk
management and alternative investment solutions within the
financial service industry will likely be accretive to the
company's financials going forward.
However, a slow economic recovery, high debt levels in Affiliated
Managers' balance sheet and rising expenses are expected to keep
the company's financials under pressure.
Performance of Other Asset Managers
Among other investment management firms,
The Blackstone Group L.P.
Ameriprise Financial Inc.
) outpaced the Zacks Consensus Estimate in their latest earnings
releases. The results of these companies were driven by
improvement in top line, partially offset by higher expenses.
Further, all three companies recorded impressive AUM growth.
AFFIL MANAGERS (AMG): Free Stock Analysis
AMERIPRISE FINL (AMP): Free Stock Analysis
BLACKROCK INC (BLK): Free Stock Analysis
BLACKSTONE GRP (BX): Free Stock Analysis
To read this article on Zacks.com click here.