Affiliated Managers Group Inc Valuation – January 2017 $AMG

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – January 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Affiliated Managers Group Inc (AMG) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Affiliated Managers Group, Inc. is an asset management company with equity investments in boutique investment management firms (Affiliates). The Company is focused on investing in the boutique investment management firms globally, including traditional, alternative and wealth management firms, specializing in an array of active return-oriented investment strategies. The Company manages assets in its three distribution channels: Institutional, Mutual Fund and High Net Worth. Through its Affiliates, the Company manages active return-oriented strategies primarily through separate accounts for large institutional investors around the world, including foundations, endowments, sovereign wealth funds and retirement plans for corporations and municipalities. The Company’s aggregate assets under management are $611.3 billion in over 500 investment products across a range of active return-oriented strategies and distribution channels.

AMG Chart

AMG data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of AMG – January 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,935,583,762 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.01 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 353.56% Pass
6. Moderate PEmg Ratio PEmg < 20 17.15 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.54 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.01 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.60 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $8.33
MG Growth Estimate 15.00%
MG Value $320.53
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $120.72
MG Value based on 0% Growth $70.77
Market Implied Growth Rate 4.33%
Current Price $142.82
% of Intrinsic Value 44.56%

Affiliated Managers Group, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.67 in 2012 to an estimated $8.33 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.33% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Affiliated Managers Group, Inc. revealed the company was trading above its Graham Number of $109.36. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 17.15, which was below the industry average of 21.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-70.22.

Affiliated Managers Group, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$70.22
Graham Number $109.36
PEmg 17.15
Current Ratio 2.01
PB Ratio 2.54
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $1,166,300,000
Total Current Liabilities $579,400,000
Long-Term Debt $2,113,300,000
Total Assets $8,323,400,000
Intangible Assets $4,190,600,000
Total Liabilities $5,140,700,000
Shares Outstanding (Diluted Average) 56,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.47
Dec2015 $9.28
Dec2014 $8.01
Dec2013 $6.55
Dec2012 $3.28
Dec2011 $3.11
Dec2010 $2.81
Dec2009 $1.38
Dec2008 -$0.03
Dec2007 $4.55
Dec2006 $3.74
Dec2005 $2.81
Dec2004 $2.02
Dec2003 $1.57
Dec2002 $1.65
Dec2001 $1.47
Dec2000 $1.66
Dec1999 $2.12
Dec1998 $0.89
Dec1997 -$2.46
Dec1996 -$0.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.33
Dec2015 $7.18
Dec2014 $5.67
Dec2013 $4.15
Dec2012 $2.67
Dec2011 $2.36
Dec2010 $2.15
Dec2009 $2.05
Dec2008 $2.46
Dec2007 $3.45
Dec2006 $2.72
Dec2005 $2.11
Dec2004 $1.73
Dec2003 $1.62
Dec2002 $1.62
Dec2001 $1.31
Dec2000 $0.95

Recommended Reading:

Other ModernGraham posts about the company

Affiliated Managers Group Analysis – Initial Coverage $AMG

Other ModernGraham posts about related companies

Corelogic Inc Valuation – Initial Coverage $CLGX
CI Financial Corp Valuation – Initial Coverage $TSE-CIX
Stifel Financial Corp Valuation – Initial Coverage $SF
SEI Investments Company Valuation – Initial Coverage $SEIC
INTL Fcstone Inc Valuation – Initial Coverage $INTL
SLM Corp Valuation – December 2016 $SLM
The Western Union Company Valuation – December 2016 $WU
IGM Financial Inc Valuation – Initial Coverage $IGM
Main Street Capital Corporation Valuation – September 2016 $MAIN
Navient Corp Valuation – August 2016 $NAVI


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.