Back to top

Image: Bigstock

Ameriprise (AMP) Up 0.9% Since Last Earnings Report: Can It Continue?

Read MoreHide Full Article

A month has gone by since the last earnings report for Ameriprise Financial Services (AMP - Free Report) . Shares have added about 0.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ameriprise due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ameriprise Beats on Q3 Earnings as Revenues & AUM Rise

Ameriprise’s third-quarter 2018 adjusted operating earnings per share of $3.74 surpassed the Zacks Consensus Estimate of $3.61. Further, the figure was 5% above the year-ago quarter level.

Results benefited from an improvement in revenues. Further, growth in assets under management (AUM) and assets under administration (AUA) supported earnings. However, rise in expenses was an undermining factor.

After taking into consideration several significant items, net income was $503 million or $3.43 per share compared with $507 million or $3.26 per share in the prior-year quarter.


Revenues Improve, Costs Rise

Net revenues (on a GAAP basis) were $3.29 billion for the quarter, reflecting an increase of 9% from the year-ago quarter. Moreover, it surpassed the Zacks Consensus Estimate of $3.19 billion.

On an operating basis, total adjusted net revenues were $3.27 billion, increasing 9% from the prior-year quarter.

Adjusted operating expenses were $2.62 billion, rising 14% from the prior-year quarter.

Strong AUM & AUA

As of Sep 30, 2018, total AUM and AUA was $913.46 billion, reflecting a year-over-year increase of 5%, primarily driven by Ameriprise advisor client net inflows.

Share Repurchases

In the reported quarter, Ameriprise repurchased 2.4 million shares for $353 million.

Outlook

Management expects margin expansion in the AWM segment to continue over time, assuming no significant market disruptions will take place. Also, margins in the AM segment are anticipated to improve to a range of 35-39%, as the company enters more normalized markets.

Management expects to continue returning 90-100% of operating earnings to its shareholders in 2018.

The company expects G&A expenses to increase 4-6% in 2018.

The company expects adjusted operating effective tax rate to be roughly 16% in 2018. Management believes that lower tax rate will have an ongoing benefit to bottom line and anticipates earning back the one-time charge recorded in fourth-quarter 2017 by 2019.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Ameriprise has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Ameriprise has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Ameriprise Financial, Inc. (AMP) - free report >>

Published in