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5 Reasons Why Ameriprise (AMP) Stock Is An Attractive Pick

By Zacks Investment ResearchStock MarketsSep 25, 2017 08:35AM ET
5 Reasons Why Ameriprise (AMP) Stock Is An Attractive Pick
By Zacks Investment Research   |  Sep 25, 2017 08:35AM ET
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At the time when financial stocks are in the spotlight, adding a few to your investment portfolio will be a wise decision. Today we bring one such asset manager, Ameriprise Financial, Inc. (NYSE:AMP) for you to consider.

The company has grown meaningfully over the years organically and through acquisitions. Also, Ameriprise’s strength can be seen in several areas including consistent top-line growth, improving earnings performance and a strong balance sheet position.

Yet, continued outflows in the Asset Management segment and higher expense levels are major near-term concerns for Ameriprise. Despite these headwinds, this Zacks Rank #2 (Buy) stock seems like an attractive investment opportunity right now.

The Zacks Consensus Estimate increased 4% over the last 90 days for both 2017 and 2018 to $11.23 and 12.59, respectively. Further, shares of Ameriprise increased 28.8% so far this year, outperforming the industry’s gain of 21.6%.

Why Ameriprise is a Solid Pick?

Revenue Growth: Ameriprise remains focused on its organic growth strategy, depicted by its consistent efforts to keep pace with dynamic market needs through launch of new products. This strategy helped the company in witnessing a rise in total net revenues (GAAP basis) at a compound annual growth rateof 3.4% over the last five years (2012-2016).

Further, the company’s projected sales growth of 2.9% and 5.5% for 2017 and 2018 respectively,ensures continuation of the upward trend in revenues. Moreover, management projects 6-8% revenue growth over the longterm.

Earnings per Share Strength: Over the past three to five years, Ameriprise witnessed earnings per share (EPS) growth of 14% compared with 4.4% gain for the industry. Further, the company’s earnings are projected to grow 19.5% in 2017, higher than 13.1% predicted for the industry.

Steady Capital Deployment Actions: Ameriprise’s steady capital deployment plans are impressive. The company has been regularly increasing its dividends since 2010, with the last hike announced in April 2017. Further, the company has share buyback plan in place. Given the strong capital position and decent earnings growth, the company should be able to sustain its capital deployment activities, thus enhancing shareholder value.

Stock Seems Undervalued: Ameriprise has a Value Score of A. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of A or B, when combined with Zacks Rank #1 (Strong Buy) or #2, offer the best upside potential.

Solid Return on Equity (ROE): With an ROE of 26.54% compared to the industry average of 12.24%, Ameriprise appears to reinvest its cash more efficiently.

Other Stocks Worth a Look

Some other stocks worth considering in the same industry are America First Multifamily Investors, L.P. (NASDAQ:ATAX) , KKR & Co. L.P. (NYSE:KKR) and PennantPark Floating Rate Capital Ltd. (NASDAQ:PFLT) . All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

America First Multifamily Investors has witnessed an upward earnings estimate revision of 16.7% for the current year, over the past 60 days. Also, its share price is up 13.9%, year to date.

KKR & Co earnings estimates have been revised 6.5% upward for the current year in the past 60 days. Also so far this year, its share price increased 28.2%.

PennantPark Floating Rate Capital recorded an upward earnings estimate revision of 5.5% for the current year in the past 60 days. Also, its share price has seen a 2% rise so far this year.

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KKR & Co. L.P. (KKR): Free Stock Analysis Report

PennantPark Floating Rate Capital Ltd. (PFLT): Free Stock Analysis Report

America First Multifamily Investors, L.P. (ATAX): Free Stock Analysis Report

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5 Reasons Why Ameriprise (AMP) Stock Is An Attractive Pick

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5 Reasons Why Ameriprise (AMP) Stock Is An Attractive Pick

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