NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 39.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, AMG has a quick ratio of 2.07, which demonstrates the ability of the company to cover short-term liquidity needs.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Capital Markets industry and the overall market, AFFILIATED MANAGERS GRP INC's return on equity is below that of both the industry average and the S&P 500.
Affiliated Managers Group, Inc., through its affiliates, operates as an asset management company providing investment management services to mutual funds, institutional clients, and high net worth individuals in the United States. It provides advisory or subadvisory services to mutual funds. The company has a P/E ratio of 40, above the average financial services industry P/E ratio of 24.6 and above the S&P 500 P/E ratio of 17.7. Affiliated Managers Group has a market cap of $4.5 billion and is part of the
industry. Shares are down 22% year to date as of the close of trading on Friday.
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