Artisan Partners Asset Management Inc. APAM is gaining from diverse product offerings and investment strategies, along with technological and operational capabilities. A diversified asset under management (AUM) base across equity and fixed-income classes is another positive.
Artisan Partners’ shares have gained 12.3% in the past month compared with the industry’s 11.8% growth. The company currently flaunts a Zacks Rank #1 (Strong Buy).
Price Performance
Image Source: Zacks Investment Research
What Makes APAM Stock Worth Betting on
Solid Organic Growth: The company has been witnessing decent organic growth. Its net revenues recorded a CAGR of 3.3% over the last five years (ended 2023), with some volatility. The trend persisted in the first nine months of 2024, with a year-over-year increase of 12.2%. The rise was driven by a higher average AUM.
The company’s diverse product offerings and investment strategies continue to attract investors and are expected to support revenue growth. Focusing on long-term growth, it has been investing in new teams, and technological and operational capabilities.
Rising AUM: Artisan Partners’ total AUM has improved over the years. The metric saw a five-year (2018-2023) compound annual growth rate (CAGR) of 9.3%, with the trend continuing in the first nine months of 2024. The company’s efforts to improve and add investment strategies continue to support AUM growth.
A diversified AUM base across equity and fixed-income classes is another positive. Improving trends in global equity and debt markets, with the stabilization in the economy, will likely support AUM, aiding top-line growth.
Solid Balance Sheet Position: Artisan Partners has a decent balance sheet. As of Sept. 30, the company had borrowings of around $200 million, which have been relatively stable in the past few quarters. Cash and cash equivalents as of the same date were $253.9 million. The company also had a $100-million revolving credit facility. At the end of the third quarter of 2024, the debt-leverage ratio was 0.5X.
APAM has about $158 million of seed capital invested in its Artisan investment products, with significant amounts of realizable capacity. As those products begin to scale, the company will redeem the seed capital to deploy into new products, reinvest in the business or return it to shareholders. Thus, its higher cash levels and modest leverage indicate a decent liquidity position.
Earnings Strength: In the last three to five years, Artisan Partners’ earnings declined 1.6%. However, the Zacks Consensus Estimate for APAM’s current-year earnings has been revised nearly 3.9% upward to $3.49 per share over the past 60 days, reflecting analysts’ bullish sentiments regarding its growth potential. Further, it represents an increase of 19.5% from the year-ago period.
EPS Estimate Revision
Image Source: Zacks Investment Research
Favorable Valuations: From a valuation standpoint, APAM appears inexpensive relative to the industry. The company is currently trading at a discount with a forward 12-month price-to-earnings (P/E) multiple of 12.97X, below the industry average of 17.93X.
Price-to-Earnings
Image Source: Zacks Investment Research
Other Finance Stocks to Consider
Some other top-ranked finance stocks are Federated Hermes, Inc. FHI and Janus Henderson Group plc JHG, each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Federated Hermes’ earnings estimates for 2024 have been revised 0.3% upward to $3.15 per share in the past 30 days. FHI’s shares have gained 7.5% over the past month.
Janus Henderson’s 2024 earnings estimates have revised 4.5% upward to $3.43 per share in the past 30 days. JHG shares have gained 8.9% over the past six months.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
