Ameriprise Financial Inc. (AMP) reported fourth-quarter 2014 operating earnings per share of $2.30, outpacing the Zacks Consensus Estimate of $2.22. Moreover, the figure came in 23% above the year-ago quarter.
For 2014, operating earnings of $8.52 per share surpassed the Zacks Consensus Estimate of $8.44. Also, it was 21% up from $7.05 earned in 2013.
Continuous improvement in revenues, driven by steady performance of the company’s segments like Advice & Wealth Management, Protection and Asset Management, was the major highlight of the quarter. Further, assets under management (“AUM”) and assets under administration displayed robust growth. However, mounting expenses continued to weigh on Ameriprise’s bottom line.
After considering integration and restructuring charges, market impact on variable annuity guaranteed benefits, index universal life benefits and net realized gains/losses, Ameriprise’s net income from continuing operations came in at $426 million or $2.23 per share compared with $298 million or $1.47 per share in the prior-year quarter.
Similarly, for 2014, net income from continuing operations came in at $1.6 billion or $8.31 per share, up from $1.3 billion or $6.46 per share in 2013.
Behind the Headlines
On an operating basis, net revenue climbed 5% year over year to $3.0 billion, driven by net inflows from clients and market appreciation. Further, the figure was in line with the Zacks Consensus Estimate.
For 2014, net revenue was $11.6 billion, up 7% year over year. However, it was marginally below the Zacks Consensus Estimate of $11.7 billion.
Operating expenses increased 5% year over year to $2.4 billion. The increase was primarily owing to higher interest credited to fixed accounts as well as general and administrative expenses.
As of Dec 31, 2014, total AUM and assets under administration summed $806 billion, increasing 5% year over year. The growth was mainly attributable to market appreciation and advisor client net inflows.
Capital Deployment Activities
In the reported quarter, Ameriprise repurchased 2.7 million shares for $335 million. The company also returned $109 million to its shareholders as quarterly dividends. Additionally, for the full year, Ameriprise returned $1.8 billion to shareholders through share repurchases and dividends.
Concurrently, Ameriprise announced a quarterly dividend of 58 cents per share. The dividend will be paid on Feb 27 to shareholders of record as of Feb 9.
Our Take
Ameriprise’s consistent efforts to propel growth were reflected in its strong quarterly results. Given the relatively sturdy equity market and the company’s robust AUM growth, we expect the top line to improve further in the upcoming quarters. Moreover, the company’s effective capital deployment activities will assist it in gaining investors’ confidence.
However, the rising trend of expenses over several years remains a matter of concern for Ameriprise. Moreover, continuous net outflows in the company’s Asset Management segment may strain its overall revenue-generation capacity, going forward.
At present, Ameriprise has a Zacks Rank #2 (Buy).
Performance of Other Investment Managers
Among other investment management firms, BlackRock, Inc. (BLK) reported fourth-quarter adjusted earnings of $4.82 per share, surpassing the Zacks Consensus Estimate of $4.68, on the back of robust inflows.
Janus Capital Group, Inc. (JNS) reported fourth-quarter earnings per share attributable to common shareholders of 24 cents, beating the Zacks Consensus Estimate by 4 cents. Results reflected top-line growth and increased AUM aided by net inflows.
T. Rowe Price Group, Inc.’s (TROW) fourth-quarter 2014 earnings of $1.18 per share beat the Zacks Consensus Estimate by 5 cents, driven by improved revenue growth.
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