Yahoo Finance Should You Be Adding Affiliated Managers Group (NYSE:AMG) To Your Watchlist Today?
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Affiliated Managers Group (NYSE:AMG). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Affiliated Managers Group with the means to add long-term value to shareholders.
View our latest analysis for Affiliated Managers Group
Affiliated Managers Group's Improving Profits
In the last three years Affiliated Managers Group's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Affiliated Managers Group's EPS has risen over the last 12 months, growing from US$11.83 to US$14.51. This amounts to a 23% gain; a figure that shareholders will be pleased to see.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Affiliated Managers Group shareholders can take confidence from the fact that EBIT margins are up from 33% to 37%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Affiliated Managers Group?
Are Affiliated Managers Group Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
The good news is that Affiliated Managers Group insiders spent a whopping US$1.0m on stock in just one year, without so much as a single sale. The shareholders within the general public should find themselves expectant and certainly hopeful, that this large outlay signals prescient optimism for the business. It is also worth noting that it was Independent Director Tracy Palandjian who made the biggest single purchase, worth US$509k, paying US$138 per share.
Along with the insider buying, another encouraging sign for Affiliated Managers Group is that insiders, as a group, have a considerable shareholding. Given insiders own a significant chunk of shares, currently valued at US$67m, they have plenty of motivation to push the business to succeed. This would indicate that the goals of shareholders and management are one and the same.
Does Affiliated Managers Group Deserve A Spot On Your Watchlist?
One important encouraging feature of Affiliated Managers Group is that it is growing profits. On top of that, we've seen insiders buying shares even though they already own plenty. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. You still need to take note of risks, for example - Affiliated Managers Group has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Affiliated Managers Group, you'll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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