Where Does AMG Stand After Surging 27.9% in 2024?

If you have ever scanned the financial headlines and wondered whether Affiliated Managers Group deserves a place in your portfolio, you are not alone. The stock’s journey has been nothing short of eye-catching, with a jaw-dropping 246.4% gain over the past five years. This year alone, the share price has surged by 27.9%, and it is up 6.3% in the last month despite a modest 1.6% slip over the most recent week. That kind of performance gets investors talking, and for good reason.

Much of this momentum can be traced to the company’s strong position in the asset management sector, combined with shifting market sentiment as investors seek growth and stability. Although risk perceptions have fluctuated, with brief pullbacks along the way, Affiliated Managers Group’s long-term uptrend speaks to a growing confidence in its strategy and execution. Each bounce and dip seems to give investors another data point in weighing the stock’s risk and potential return.

Of course, none of these price movements tell the full story. To figure out where the stock might be headed next, it pays to focus on valuation and how this company stacks up according to well-known metrics. Affiliated Managers Group clocks in with a valuation score of 3 out of 6, meaning it is considered undervalued by half of the methods analysts commonly use. But is that enough to make the leap, or should you look deeper? Let’s break down what that score really means, and stick around for an even more useful approach to understanding value at the end of the article.

Affiliated Managers Group delivered 35.6% returns over the last year. See how this stacks up to the rest of the Capital Markets industry.

Approach 1: Affiliated Managers Group Excess Returns Analysis

The Excess Returns model evaluates a company by measuring how much profit it generates above its cost of equity, using shareholders’ money efficiently over time. This approach is especially useful for asset managers like Affiliated Managers Group because it highlights the relationship between book value, earnings power, and expected shareholder returns.

According to this model, Affiliated Managers Group has a book value of $114.44 per share, with a stable earnings per share (EPS) of $19.07 drawn from the company’s median return on equity over the past five years. The cost of equity stands at $9.16 per share, resulting in an impressive excess return of $9.91 per share. The company’s average return on equity has been strong at 19.01%, and its stable book value, another crucial input, is $100.33 per share. These figures reinforce the firm’s ability to consistently deliver returns well above required thresholds, a positive signal for long-term investors seeking solid capital efficiency.

The Excess Returns analysis pegs the intrinsic value of Affiliated Managers Group at $264.30 per share. Compared to the current market price, this implies the stock is trading at a 9.6% discount, signaling it is just slightly undervalued by this method.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Affiliated Managers Group.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Affiliated Managers Group's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Affiliated Managers Group Price vs Earnings

The price-to-earnings (PE) ratio is widely favored for valuing profitable companies, as it links share price directly to underlying earnings. It is a straightforward way for investors to judge whether they are paying a fair price in the context of how much the company actually earns. For companies that continuously generate profits like Affiliated Managers Group, PE ratios allow for a quick comparison to the broader sector and individual peers.

While a "normal" or "fair" PE ratio can vary, it is typically influenced by factors such as a company’s expected growth rate and perceived risk. Fast-growing or lower-risk companies often command a higher PE, while slower growers or riskier businesses trade at lower multiples. Affiliated Managers Group’s current PE stands at 15.4x, well below the Capital Markets industry average of 27.2x, and also lower than its peer average of 18.3x. This might initially suggest an undervalued stock, but those numbers only tell part of the story.

Simply Wall St's proprietary Fair Ratio digs deeper by factoring in the company’s unique earnings growth, risks, profit margins, size, and the sector environment. For Affiliated Managers Group, the Fair Ratio is calculated at 14.9x, almost identical to its current 15.4x PE. Unlike basic industry or peer comparisons, this approach gives a more accurate picture by customizing the benchmark specifically to Affiliated Managers Group’s circumstances. With such a small difference, this suggests the stock is priced just about right according to its fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Affiliated Managers Group Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives, a modern, user-friendly approach that goes beyond the traditional models by letting you anchor your investment decisions in the company’s evolving story.

In simple terms, a Narrative is your personalized investment thesis, tying together expectations for future earnings, margins, and growth, along with your own view of what Affiliated Managers Group is worth; it is the story you tell yourself (and others in the community) about why the numbers add up.

Unlike just crunching ratios, Narratives connect the company’s real-world developments, financial forecasts, and your explanation for why you think a certain price is fair. This helps keep your reasoning rooted in both facts and your perspective.

This powerful tool is available directly on Simply Wall St’s Community page, designed for all investors to collaboratively share and compare their views. It is updated automatically whenever new company news or earnings are released, ensuring your thesis always reflects the latest information.

Narratives make timing decisions easier since you can clearly see when the Fair Value from your story is above or below the current price. For instance, some investors believe Affiliated Managers Group is worth as much as $331 per share based on rapid private markets growth, while others see risks and set their fair value nearer $195, all in one transparent place.

Do you think there's more to the story for Affiliated Managers Group? Create your own Narrative to let the Community know!

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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