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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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in 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
Affiliated Managers Group has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Affiliated Managers Group's EPS shot from US$8.13 to US$14.53, over the last year. It's a rarity to see 79% year-on-year growth like that.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Affiliated Managers Group shareholders can take confidence from the fact that EBIT margins are up from 31% to 38%, 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.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Affiliated Managers Group's forecast profits?
Are Affiliated Managers Group Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
The good news is that Affiliated Managers Group insiders spent a whopping US$3.0m on stock in just one year, without so much as a single sale. Knowing this, Affiliated Managers Group will have have all eyes on them in anticipation for the what could happen in the near future. Zooming in, we can see that the biggest insider purchase was by Head of Affiliate Investments Rizwan Jamal for US$514k worth of shares, at about US$171 per share.