Why AssetMark Financial Stock jumped 14.6% this week

What happened

The share price of AssetMark Financial Holdings (NYSE:AMK) was up 14.6% this week from last Friday’s close at 1 p.m. ET today, according to data provided by S&P Global Market Intelligence. It had risen 17.4% over the week. The stock price is down about 10.2% year-to-date at $23.54 per share as of 1 p.m. ET.

It outperformed major indices as the Dow Jones Industrial Average fell by 2.6%, the S&P500 was down 4.7%, and the Nasdaq had fallen 7.1% this week as of 1 p.m. ET on Friday.

So what

AssetMark Financial offers a turnkey asset management program, or TAMP, which allows its clients, primarily financial advisors, to outsource certain investment management functions and services through its automated platform.

The catalyst for the surge was the company’s third-quarter earnings report, which came out on Tuesday. The company had a strong quarter, growing revenue and revenue year over year and beating analysts’ expectations for both.

Specifically, TAMP generated $155 million in revenue, up 10.7% year-over-year, and $30.1 million in net income, up 146% year-on-year. on the other, with earnings per share (EPS) of $0.41. It beat analysts’ revenue estimates by about 6% and EPS projections by about 28%. AssetMark also increased its profit margin to 19.5% from 8.8% a year ago.

The platform’s assets fell 8.6% to $79.4 billion due to market depreciation and lower net flows, but it continues to grow its customer base, adding 159 new advisors and more than 2 900 new households on the platform during the quarter. Currently, it has more than 8,700 advisors and some 223,000 investor households on the platform.

“Our close connectivity with our advisors, particularly during times of uncertainty, has enabled us to deliver another quarter of record results, including record financial results in terms of revenue and profit and an increase in adjusted margin of 200 basis points year-over-year,” Natalie Wolfsen, CEO of AssetMark, said in a statement.

Now what

This is a tough market for asset managers as the market has been in bearish territory for most of the year. And for AssetMark, most of its revenue comes from asset-based fees. However, AssetMark has been able to reduce its operating expenses and diversify its revenue streams with more pay-as-you-go revenue, expanded services, and revenue from licensing its technology.

It’s also a tough market for its clients, advisers and brokers, which Wolfsen said the company is looking to capitalize on.

“In this challenging environment, we are committed to playing on the offensive and doing even more to demonstrate our value to current and potential advisors,” she said. “We’ve increased our representation at broker conferences, increased our spend on high-impact digital lead generation, and are hosting more live community events. These efforts are driving new advisor engagement and we’re confident in the opportunity. coming .”

AssetMark is rather expensive with a price/earnings (P/E) ratio that has risen to 23.6, but the forward P/E ratio is a comfortable 11.7. It’s still a tough market for asset managers, but AssetMark has outperformed many of its competitors and is worth watching.

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Dave Kovaleski has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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