We expect Ameriprise Financial, Inc. (AMP) to beat earnings expectations when it reports fourth-quarter and full-year 2014 results on Wednesday, Jan 28, after the market close.
Why a Likely Positive Surprise?
Our proven model shows that Ameriprise has the right combination of two key ingredients to beat earnings.
Positive Zacks ESP: Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +0.45%. This is a very meaningful and leading indicator of a likely positive earnings surprise for the company.
Zacks Rank #3 (Hold): Ameriprise carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement
The combination of Ameriprise’s Zacks Rank #3 and ESP of +0.45% makes us confident of an earnings beat on Jan 28.
Factors to Influence Fourth Quarter Results
Given a decent equity market back drop and Ameriprise’s continued focus on online innovations and new product offerings, we believe the company’s client engagement –both new as well as existing – should stay afloat, which is likely to drive revenue growth in the quarter.
Further, we observed that management and financial advice fees, which constitutes a major source of revenue, has exhibited growth in the recent quarters. Given a strong AUM pipeline as well as rising demand for advisory services, we believe the company should be able to sustain the increasing trend in this quarter as well.
Dealing primarily in asset management and advisory businesses, Ameriprise does not face substantial threat from the overall sluggish and low interest rate environment.
However, the quarter may witness rise in expenses owing to the company’s aggressive marketing and advertising strategy and expansion of distribution footprint. Also, Ameriprise’s continual recruitment of experienced advisors will expectedly elevate the compensation expenses.
Ameriprise’s quarterly activities failed to impress analysts. Hence, the Zacks Consensus Estimate for the quarter remained unchanged at $2.21 per share over the last 7 days.
Stocks that Warrant a Look
Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
T. Rowe Price Group, Inc. (TROW) has an Earnings ESP of +0.89% and it carries a Zacks Rank #3. The company is expected to release results on Jan 28.
BOK Financial Corporation (BOKF) has an Earnings ESP of +0.94% and a Zacks Rank #3. It is slated to report results on Jan 28.
Aon plc (AON) has an Earnings ESP of +1.08% and a Zacks Rank #3. It is slated to report results on Feb 6.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment