Affiliated Managers Group (AMG) is a global asset manager with equity investments in a large group of investment management firms or affiliates.

On the whole, the affiliates manage more than 500 investment products across each major product category – global, international and emerging markets equities, domestic equities, alternative and fixed income products. As of Sept. 30, 2024, Affiliated Managers had a total AUM of $728.4 billion.

AMG shares sits at a Zacks #4 Rank after analysts have slowly ratcheted down EPS estimates since the company's last quarterly report.

In the past 90 days, the full year 2024 consensus dropped from $22.02 to $20.90. AMG will report their Q4 results in early February. And the current year EPS consensus fell from $24.79 to $23.11.

Those figures would still represent 7.3% and 10.5% annual growth, respectively, while the 2024 topline is expected to come in flat near $2.05 billion.

Peak Valuations Meet Rising Bond Yields

One view of this earnings trend could be a stock market at historically high valuation levels. 

Since AMG investments touch such a broad swath of the financial markets, their results could be indicative of larger macro trends.

Adding additional pressure could be a steepening yield curve factoring in higher and stickier inflation. This week, Goldman Sachs published a research report showing every 50 basis point increase in real bond yields imposes a roughly 3% hit to aggregate S&P 500 valuations.

At a 4% real yield on the 10-year Treasury, the P/E ratio would get knocked back down from 23.5 to 19.5. And this would imply an index level of 5375, or 10% lower.

Based on Goldman analysis, the current real yield as of January 7 was 2.3%. Since the 10-year has moved higher, we can assume the index is around their 21.4x P/E and an implied level of 5900.

These macro pivots and trends will be heavily watched as we head into a new administration and other inflation challenges for a newly dovish Fed.

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