Balanced View on Ameriprise - Analyst Blog
April 09 2013 - 6:50AM
Zacks
On Apr 5, 2013, we reaffirmed our long-term Neutral
recommendation on Ameriprise Financial Inc. (AMP).
Our decision is based on its robust capital deployment actions and
strong liquidity position. However, escalating expenses and
unsettling macroeconomic factors are expected to remain a drag on
its profitability in the near to mid term.
Why the Neutral Stance?
Over the past 60 days, there was a marginal upward estimate
revision for 2013. Further, estimates for 2014 have slightly
improved over the same period. In addition, over the past 4
quarters, Ameriprise has delivered 3 positive earnings surprises
with an average beat of 1.8%. However, it carries a Zacks rank #2
(Buy).
Further, the Zacks Consensus Estimate for first-quarter 2013 is
pegged at $1.56 on revenue expectations of 2,612 million. The
company had delivered better-than-expected fourth-quarter earnings
on the back of augmented top line, partially offset by higher
expenses.
A well-diversified portfolio compared with its industry peers along
with powerful capital deployment actions are the positives for the
company. Also, growth through acquisitions has helped it expand
significantly and better serve the dynamic markets. The recent and
most notable acquisition is the asset management business of
Columbia Management from Bank of America
Corporation (BAC) in 2010. This acquisition has
significantly elevated the performance of Ameriprise’s retail
mutual fund and institutional management businesses.
However, escalating expenses remain a major headwind for the
company. Although general and administrative expenses and interest
and debt expenses have declined in 2012, distribution expense has
increased from 2011. Though the advertising campaign and technology
upgrades will be beneficial for Ameriprise in the long run,
swelling expenses may prove harmful for its profitability. In
addition, the existing low interest rate environment and the
ongoing outflows related to the integration of Columbia Management
will keep Ameriprise’s financials under pressure in the near
term.
Other Stocks to Consider
Other stocks that are performing better in the same sector include
Apollo Global Management, LLC (APO) and
SEI Investments Co. (SEIC). Both these companies
carry a Zacks Rank #1 (Strong Buy).
AMERIPRISE FINL (AMP): Free Stock Analysis Report
APOLLO GLOBAL-A (APO): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
SEI INVESTMENTS (SEIC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
American Community Properties (AMEX:APO)
Historical Stock Chart
From Apr 2024 to May 2024
American Community Properties (AMEX:APO)
Historical Stock Chart
From May 2023 to May 2024