On Mar 16, 2015, we issued an updated research report on Ameriprise Financial, Inc. AMP. Growth in assets under management (AUM) continued to be encouraging, whereas weak cost control remained an undermining factor.
Ameriprise, with a network of over 9,700 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 to enhance revenue generation, reflected in the 9.5% year-over-year increase in total net revenues in 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 4% year-over-year growth in AUM continues to reflect 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 and consistently strong performance. With a steady stock repurchase program in place, frequent hikes in dividend and recording of earnings beat in all the four quarters of 2014, the company’s success in gaining market confidence was evident from the 8.2% rise in share price since the latest earning release.
On the flipside, mounting expenses continue to keep Ameriprise’s profitability under pressure. The 5.3% rise in expenses in 2014 compared with the prior year 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 escalating costs are bound to weigh on its financials.
This can also be observed in the Zacks Consensus Estimate for 2015 and 2016, which remained flat over the last 30 days.
Currently, Ameriprise carries a Zacks Rank #2 (Buy). Other investment management firms include AllianceBernstein Holding L.P. AB, The Blackstone Group L.P. BX and Lazard Ltd. LAZ. All these stocks sport the same Zacks Rank as Ameriprise.
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