On Dec 16, 2014, we issued an updated research report on Ameriprise Financial, Inc. (AMP). Consistent improvement in the top line continued to be encouraging, whereas weak expense management remained a concern.
Ameriprise, with a network of more than 9,600 advisors, offers an extensive range of products and services to meet the objectives of individual and institutional clients. The leading global financial institution continues to invest for expanding its potential to maximize advisor productivity and client satisfaction. This has helped the company in improving revenue generation, which has been reflected in the 11.2% rise in total net revenues in the first nine months of 2014.
Further, steady performance of the company’s Advice & Wealth Management as well as Asset Management segment along with new products are expected to boost top-line growth going forward. Moreover, the 8% year-over-year growth in assets under management continues to impress and reflects the company’s ability to leverage existing strengths to efficiently expand into new global and emerging markets.
Moreover, Ameriprise continues to attract investors’ attention through its strong capital deployment activities. With a steady stock repurchase program in place and frequent hikes in dividend, the company’s success in gaining market confidence was evident from the 17.6% year-to-date increase in share price.
On the flip side, mounting expenses continue to keep Ameriprise’s profitability under pressure. The 6.3% rise in expenses in the first nine months of 2014 compared with the corresponding year-ago period emphasizes on the need for effective cost control efforts. Moreover, the expenses are expected to remain elevated in the near term given the company’s focus on advertising campaign and technology upgrades.
Though Ameriprise has the potential to capitalize on available opportunities on the back of a healthy asset position and diversified product mix, net outflows in the Asset Management segment and slow economic recovery are bound to weigh on its financials.
This can also be observed in the Zacks Consensus Estimate for 2014 and 2015, which remained flat over the last 30 days.
Currently, Ameriprise carries a Zacks Rank #2 (Buy).
Stocks That Warrant a Look
Other investment management firms include BlackRock, Inc. (BLK), The Blackstone Group L.P. (BX) and Invesco Ltd. (IVZ). All these stocks sport the same Zacks Rank as Ameriprise.
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