A month has gone by since the last earnings report for Ameriprise Financial, Inc. (NYSE:AMP) . Shares have lost about 2.1% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is AMP due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ameriprise Q1 Earnings Beat on Higher Revenues & AUM
Ameriprise’s first-quarter 2018 adjusted operating earnings per share of $3.70 comfortably surpassed the Zacks Consensus Estimate of $3.47. Also, the figure was 37% above the year-ago quarter level.
Results benefited from an improvement in revenues. Also, growth in assets under management and assets under administration supported the earnings. However, a rise in expenses was an undermining factor.
After taking into consideration several significant items, net income came in at $594 million or $3.91 per share, up from $403 million or $2.52 per share in the prior-year quarter.
Revenues and Costs Rise
Net revenues (on a GAAP basis) were $3.17 billion for the quarter, reflecting 8% increase from the year-ago quarter. Also, it surpassed the Zacks Consensus Estimate of $3.12 billion.
On an operating basis, total net revenues (excluding 12b-1 impact) came in at $3.10 billion, increasing 9% from the prior-year quarter.
Adjusted operating expenses came in at $2.45 billion, increasing 4% from the prior-year quarter.
Strong AUM & AUA
As of Mar 31, 2018, total AUM and AUA was $887.23 billion, reflecting an increase of 9% year over year, primarily driven by Ameriprise advisor client net inflows.
Share Repurchases
In the reported quarter, Ameriprise repurchased 2.4 million shares for $387 million.
Outlook
Management expects margin expansion in the AWM segment to continue over time, assuming no significant market disruptions will take place. Also, margins in the AM segment are anticipated to improve to a range of 35-39%, as the company enters more normalized markets.
Management expects to continue returning 90-100% of operating earnings to its shareholders in 2018.
The company expects effective tax rate to be in the 17-19% range in the near term. Management believes that lower tax rate will have an ongoing benefit to bottom line and anticipates earning back the one-time charge recorded in fourth-quarter 2017 by 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower.
VGM Scores
At this time, AMP has a poor Growth Score of F. Its Momentum is doing a bit better with a D. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, AMP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Ameriprise Financial, Inc. (AMP): Free Stock Analysis Report
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