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What's in Store for Affiliated Managers Group in 2017

PART:
1 2 3 4 5
Part 4
What's in Store for Affiliated Managers Group in 2017 PART 4 OF 5

Could AMG’s Premium Valuation Attract Investors?

Premium valuation

Affiliated Managers Group (AMG) reported strong results in 1Q17 thanks to its affiliates’ alternative business. The company also witnessed heavy outflow from US equities. AMG’s current PE (price-to-earnings) ratio is 18.8x, which is mainly due to its performance in 1Q17.

In the quarter, AMG’s affiliates performed well across a diverse range of alternatives. The company’s affiliates generated alpha returns. Its one-year forward PE ratio was 11.4x, compared with competitors’ ratio of 10.5x. AMG currently trades at a premium, mainly due to fundraising expectations for its private equity. Management has a positive outlook on institutional companies. Growth opportunities are visible in the near future as the company enters a fundraising phase for illiquid strategies.

Could AMG&#8217;s Premium Valuation Attract Investors?

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Peer comparison

AMG currently has a higher PE ratio than alternative asset managers (XLF), which is mainly due to the strong performance of its alternative business category. Competitors’ forward PE ratios are as follows:

  • Apollo Global Management (APO): 10.2x
  • AllianceBernstein (AB): 11.5x
  • KKR (KKR): 8.6x
  • Ameriprise Financial (AMP): 11.7x
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