On Jun 29, 2015, we issued an updated research report Ameriprise Financial, Inc. AMP. We remain optimistic about the company’s growth prospects in the long term as it remains focused on sustaining revenue growth.
The Minnesota-based investment management company continues to witness a rise in its net revenue over the past few years. Management targets growth of 6%–8% in operating net revenues in the long term. We believe the company is well positioned to achieve its target as it continues to launch new products that complement its existing portfolio.
Further, pursing growth opportunities through inorganic routes, in April, Ameriprise inked a deal to acquire the retail assets of JHS Capital Advisors, a registered securities broker dealer and registered investment advisor, providing personalized client services for investors nationwide. The deal is expected to be successfully completed in the third quarter of 2015.
Additionally, the company remains focused on enhancing shareholders’ value through share buybacks and dividend distribution. Management expects to continue to return 90–100% of operating earnings to its shareholders in 2015.
However, we remain cautious as the company’s asset management business is likely to witness outflows in the near term. Also, escalating costs limit Ameriprise’s bottom-line growth. Moreover, while the company is effectively reducing its deferred and acquisition-related costs through re-engineering initiatives, its fixed interest costs and claims continue to remain high.
Additionally, the bearish stance of analysts reflected as the Zacks Consensus Estimate declined slightly to $9.54 per share for 2015 over the past 30 days. Also, it declined nearly 1% to $11.04 per share for 2016.
Ameriprise currently carries a Zacks Rank #3 (Hold).
Some top-ranked stocks in the finance space include Garrison Capital Inc. GARS, Cash America International, Inc. CSH and Santander Consumer USA Holdings Inc. SC. All three stocks sport a Zacks Rank #1 (Strong Buy).
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