Affiliated Managers Group (AMG)

Asset management company Affiliated Managers Group (NYSE:AMG) fell short of the markets revenue expectations in Q3 CY2025 as sales rose 2.2% year on year to $528 million. Its non-GAAP profit of $6.10 per share was 3.7% above analysts’ consensus estimates.

Company Overview

Using a partnership approach that preserves entrepreneurial culture at its portfolio companies, Affiliated Managers Group (NYSE:AMG) is an investment firm that acquires stakes in boutique asset management companies while allowing them to maintain operational independence.

Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.

Affiliated Managers Group competes with other asset management holding companies such as BlackRock (NYSE:BLK), T. Rowe Price Group (NASDAQ:TROW), Franklin Resources (NYSE:BEN), and Invesco (NYSE:IVZ), as well as alternative asset managers like Blackstone (NYSE:BX) and KKR (NYSE:KKR).

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Affiliated Managers Group struggled to consistently increase demand as its $2.04 billion of revenue for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and is a sign of lacking business quality.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Affiliated Managers Group’s recent performance shows its demand remained suppressed as its revenue has declined by 1.3% annually over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Affiliated Managers Group’s revenue grew by 2.2% year on year to $528 million, falling short of Wall Street’s estimates.

Assets Under Management (AUM) is the cornerstone of a financial firm's investment division, representing all client capital under its stewardship. Management fees on this AUM create reliable, recurring revenue that maintains stability even when investment performance struggles, though prolonged poor returns can eventually affect asset retention and growth.

Affiliated Managers Group’s AUM has grown at an annual rate of 5.7% over the last five years, worse than the broader financials industry but faster than its total revenue. When analyzing Affiliated Managers Group’s AUM over the last two years, we can see that growth accelerated to 6.7% annually. Fundraising or short-term investment performance were net contributors for the company over this shorter period since assets grew faster than total revenue. That said, assets aren't the be-all and end-all due to their unpredictable and cyclical nature.

In Q3, Affiliated Managers Group’s AUM was $803.6 billion, beating analysts’ expectations by 2.1%. This print was 10.3% higher than the same quarter last year.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Custody Bank companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

This is because for financials businesses, interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company's control - should not.

Over the last four years, Affiliated Managers Group’s pre-tax profit margin has fallen by 1.5 percentage points, going from 44.3% to 45.8%. However, the company gave back some of its expense savings as its pre-tax profit margin declined by 43.8 percentage points on a two-year basis.

Affiliated Managers Group’s pre-tax profit margin came in at 68.7% this quarter. This result was 26.6 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Affiliated Managers Group’s EPS grew at a decent 11.1% compounded annual growth rate over the last five years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Affiliated Managers Group, its two-year annual EPS growth of 7.8% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Affiliated Managers Group reported adjusted EPS of $6.10, up from $4.82 in the same quarter last year. This print beat analysts’ estimates by 3.7%. Over the next 12 months, Wall Street expects Affiliated Managers Group’s full-year EPS of $23.22 to grow 17.8%.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Affiliated Managers Group has averaged an ROE of 20.8%, excellent for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This is a bright spot for Affiliated Managers Group.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Affiliated Managers Group currently has $2.37 billion of debt and $3.34 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.8×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

We enjoyed seeing Affiliated Managers Group beat analysts’ AUM expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed. Overall, this quarter was mixed. The stock traded up 1.7% to $242.10 immediately following the results.

Updated: December 3, 2025 at 11:22 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Affiliated Managers Group, you should also grasp the company’s longer-term business quality and valuation.

Affiliated Managers Group’s business quality ultimately falls short of our standards. First off, its revenue growth was weak over the last five years. And while Affiliated Managers Group’s expanding pre-tax profit margin shows the business has become more efficient, its AUM growth was weak over the last five years.

Affiliated Managers Group’s P/E ratio based on the next 12 months is 9.1x. While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $307.71 on the company (compared to the current share price of $270.77).