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Affiliated Managers (AMG) Beats Q4 Earnings as Costs Fall

Affiliated Managers Group Inc.AMG reported fourth-quarter 2016 economic earnings of $3.80 per share, outpacing the Zacks Consensus Estimate of $3.70. Also, earnings were up 5.8% year over year.

Better-than-expected results were driven by lower operating expenses. Further, growth in assets under management (AUM) acted as a tailwind. However, lower revenues were an undermining factor.

Affiliated Managers' economic net income (ENI) was $211.2 million, an increase of 7.9% from the prior-year quarter.

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For 2016, economic earnings per share of $12.84 beat the Zacks Consensus Estimate of $12.74. Moreover, it was 3% above the 2015 level. ENI increased 2.4% year over year to $703.6 million.

Revenue Slump Offset by Lower Expenses

Total revenue for the quarter fell 6.7% year over year to $550.3 million. Also, the top line missed the Zacks Consensus Estimate of $560.3 million.

For 2016, total revenue was $2.19 billion, down 11.7% from prior year. Further, it was below the Zacks Consensus Estimate of $2.20 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $289.7 million, up 10.1% from the year-ago quarter.

Total operating expenses declined 5.1% year over year to $376.5 million. The fall due to decline in all cost components.

As of Dec 31, 2016, total AUM grew 12.7% year over year to $688.7 billion. This reflected a net client cash inflow of $7.4 billion.

Strong Capital & Liquidity Position

As of Dec 31, 2016, Affiliated Managers had $430.8 million in cash and cash equivalents compared with $563.8 million as of Dec 31, 2015. Moreover, the company had $868.6 million of senior bank debt compared with $643.3 million as of Dec 31, 2015.

Shareholders' equity as of Dec 31, 2016, totaled $3.62 billion, up from $2.84 billion as of Dec 31, 2015.

Our Take

Affiliated Managers remains well positioned for future growth based on successful partnerships and global distribution capability, along with a diverse product mix. Also, the company's consistent investments in new affiliates and initiatives undertaken to strengthen retail market operations are expected to work in its favor, going forward.

However, we remain concerned about the impact of increased debt levels and higher intangibles on its near-term profitability.

Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise

Affiliated Managers Group, Inc. Price, Consensus and EPS Surprise | Affiliated Managers Group, Inc. Quote

Currently, Affiliated Managers carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other Asset Managers

Janus Capital Group, Inc.'s JNS fourth-quarter 2016 adjusted earnings per share of 20 cents lagged the Zacks Consensus Estimate of 24 cents. A fall in revenues and higher expenses were primarily responsible for the lower-than-expected results. However, an increase in average and total AUM was on the positive side.

BlackRock, Inc. BLK reported fourth-quarter 2016 adjusted earnings of $5.14 per share, which handedly surpassed the Zacks Consensus Estimate of $5.02. The better-than-expected number was primarily driven by a decline in total expenses. Also, higher revenues for the quarter acted as a tailwind.

Among other investment managers, Waddell & Reed Financial, Inc. WDR is slated to release its fourth-quarter 2016 results on Jan 31.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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