Financial institutions are embracing digitalization to upgrade their commercial businesses to remain competitive in the face of increasing demand for simpler and rapid commercial operations. In addition, with companies investing heavily in big data analytics skills, the global financial services industry is estimated to grow at a 6% CAGR between 2022 and 2027.
Adding to the positives, forthcoming interest rate increases could be a significant tailwind for the industry because higher interest rates allow financial institutions to boost their profits. Also, growing financial transactions and capital market activities amid a recovering economy should further drive the sector's performance.
Given this backdrop, we think it could be prudent to bet on high-quality financial stocks Affiliated Managers Group, Inc. (AMG), Lazard Ltd (LAZ), Artisan Partners Asset Management Inc. (APAM), and 360 DigiTech, Inc. (QFIN), which are trading near their 52-weeks low.
Affiliated Managers Group, Inc. (AMG)
AMG in Prides Crossing, Mass., operates as an asset management company through its affiliates, offering investment management services to mutual funds, institutional clients, and high-net-worth individuals. It provides advisory or sub-advisory services to mutual funds.
In January, AMG and Systematica Investments, an innovative technology-driven firm that emphasizes a quantitative and systematic approach to investing, announced that AMG and Leda Braga, Founder and Chief Executive Officer of Systematica, have acquired a remaining minority equity interest in Systematica, which is a third-party investor earlier owned.
During the fourth quarter, ended Dec. 31, 2021, AMG's revenue increased 24.8% year-over-year to $691.80 million. Its net income grew 44.7% from its year-ago value to $283.4 million, while its adjusted EBITDA increased 39.8% year-over-year to $356.80 million. Its EPS increased 64.2% from its year-ago value to $4.17.
Analysts expect AMG's revenue to increase 21.9% year-over-year to $681.29 million in the first quarter (ending March 2022). The company's EPS is expected to grow 3% year-over-year to $4.41 in the first quarter, ending March 2022. In addition, the company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock closed yesterday's trading session at $123.10 after hitting its 52-week low of $121.40.
AMG's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
AMG has also rated a B grade for Quality and Growth. Within the Asset Management industry, it is ranked #4 of 57 stocks.
To see additional POWR Ratings for Stability, Value, Momentum, and Sentiment for AMG, click here.
Lazard Ltd (LAZ)
LAZ, through its subsidiaries, functions as a financial advisory and asset management firm. The Financial Advisory Segment provides advisory services regarding mergers and acquisitions, capital advisory, restructurings, shareholder advisory, and other related services. The Hamilton, Bermuda-based company's Asset Management segment offers a range of investment solutions and investment management services.
LAZ's net revenue increased 13% year-over-year to $992.38 million in the fourth quarter, ended Dec. 31, 2021. Its operating income grew 23.4% from its year-ago value to $268.34 million, while its net income improved 8.5% year-over-year to $211.29 million over the period. Its EPS increased 13.4% from its year-ago value to $1.86.
The $0.93 consensus EPS estimate for the first quarter ending March 31, 2022, represents a 6.7% improvement year-over-year. Analysts expect LAZ's revenue to increase 11.5% year-over-year to $722.47 million in the first quarter, ending March 31, 2022. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters. Furthermore, the stock closed yesterday's trading session at $32.17 after hitting its 52-week low of $31.64.
LAZ's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Strong Buy in our POWR Ratings system. The stock also has a B grade for Quality and Value. In the B-rated Investment Brokerage industry, it is ranked #3 of 22 stocks.
In total, we rate LAZ on eight distinct levels. Beyond what we have stated above, we have also given LAZ grades for Growth, Momentum, Stability, and Sentiment. Get all the LAZ ratings here.
Artisan Partners Asset Management Inc. (APAM)
APAM is a publicly owned investment manager and provides its services to pension and profit-sharing plans, endowments, foundations, trusts, charitable organizations, government entities, private funds and non-U.S. funds, mutual funds, non-U.S. funds, and collective trusts. APAM is headquartered in Milwaukee, Wisc.
During the fourth quarter, which ended December 31, 2021, APAM's revenue increased 20.6% year-over-year to $315 million. The operating income grew 21.4% year-over-year to $137.80 million, while its net income increased 15.7% year-over-year to $84.60 million. The company's EPS rose 8.7% from the prior-year quarter to $1.25.
APAM is expected to witness revenue growth of $1.24 billion, representing 1% year-over-year growth in its fiscal year 2022. The $4.84 consensus EPS estimate for its fiscal year 2023 indicates a 6.5% improvement year-over-year. In addition, the company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all the trailing four quarters.
The stock closed yesterday's trading session at $34.20 after hitting its 52-week low of $33.93.
It is no surprise that APAM has an overall B rating, which equates to Buy in our POWR Ratings system. APAM has a B grade for Value and Quality. In the Asset Management industry, it is ranked #9.
Click here to see the additional POWR Ratings for APAM (Growth, Stability, Sentiment, and Momentum).
360 DigiTech, Inc. (QFIN)
Headquartered in Shanghai, the People's Republic of China, QFIN operates a digital consumer finance platform under the 360 Jietiao brand through its subsidiaries. It provides online consumer finance products to borrowers funded by institutional funding partners.
In the third quarter, ended Sept. 30, 2021, QFIN's net revenue increased 24.55% year-over-year to RMB4.61million ($0.73 million). Its non-GAAP operating income grew 37.5% from its year-ago value to RMB1.96 million ($0.31 million), while its non-GAAP net income improved 26.8% year-over-year to RMB1.63 million ($0.26 million) over the period. The company's EPS increased 22.1% from its year-ago value to $4.87.
Analysts expect QFIN's revenue to increase 33.6% year-over-year to $686.2 million in the fourth quarter (ending December 2021). The company's EPS is expected to grow 59.6% year-over-year to $6.08 in its fiscal year 2021. In addition, the company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock closed yesterday's trading session at $16.84, which was 5.2% above its 52-week low of $16.01, which it hit on Aug. 17, 2021.
QFIN's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has a B grade for Value and Quality. In the Consumer Financial Services industry, it is ranked #5 of 51 stocks.
Beyond what we have stated above, we have also given QFIN grades for Growth, Momentum, Stability, and Sentiment. Get all the QFIN ratings here.
AMG shares were trading at $127.63 per share on Wednesday morning, up $4.53 (+3.68%). Year-to-date, AMG has declined -22.41%, versus a -10.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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