Why Is Earnings Beat Less Likely For Ameriprise (AMP) In Q1?

Ameriprise Financial, Inc. (NYSE:AMP) is scheduled to report first-quarter 2018 results on Apr 23, after the market closes. Its earnings and revenues in the quarter are expected to grow year over year.

Last quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues. Also, growth in assets under management (AUM) and assets under administration (AUA) were on the positive side. However, rise in expenses acted as a headwind.

That said, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 10.7%.

However, activities of the company during the first quarter failed to encourage analysts to revise earnings estimates upward. As a result, the Zacks Consensus Estimate for earnings of $3.50 for the to-be-reported quarter decreased nearly 1% over the last 30 days. Nonetheless, the figure represents growth of 29.6% on a year-over-year basis.

Also, the Zacks Consensus Estimate for sales is $3.12 billion, which reflects an improvement of 7.6% year over year.

However, the company’s price performance has not been very encouraging. Its shares have lost 18.2% in the past three months compared with 12.5% decline of the industry.

Will the price performance improve post Q1 earnings release? To a great extent, this depends on the company’s ability to maintain its trend of beating earnings estimates.

Before we take a look at what our quantitative model predicts, let’s check the factors that are likely to influence the quarter’s results.

Factors to Influence Q1 Results

Ameriprise has been consistently making efforts to improve business. This is expected to have a positive impact on its profitability during the quarter.

Further, we expect Advice & Wealth Management segment’s (AWM) performance to continue driving the company’s results in the quarter. The segment witnessed growth in assets in the previous quarter. Based on expectations of improved advisor productivity, the same is expected to continue in the to-be-reported quarter.

Although the Asset Management segment witnessed inflows in the fourth quarter, it has been witnessing elevated levels of outflows for the last few quarters. In fact, as the company continues to make changes to enhance financial performance, outflows are expected to continue in the to-be-reported quarter. This might affect the segment’s performance.

Notably, the Zacks Consensus Estimate for net investment income of $360 million for the quarter represents an improvement of 1.4% sequentially. However, the Zacks Consensus Estimate for management, financial advice and service fee of $1.70 billion, reflects a decline of 1.5% sequentially.

Earnings Whispers

According to our quantitative model, chances of Ameriprise beating the Zacks Consensus Estimate in the first quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Ameriprise has an Earnings ESP of -4.38%.

Zacks Rank: Ameriprise currently carries a Zacks Rank #4 (Sell), which further decreases the chances of an earnings beat.

Stocks That Warrant a Look

Here are a few stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

TD Ameritrade Holding Corporation (NASDAQ:AMTD) is slated to release results on Apr 23. It has an Earnings ESP of +0.84% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Synovus Financial Corp. (NYSE:SNV) is slated to report results on Apr 24. It has an Earnings ESP of +0.38% and a Zacks Rank #3.

Capital One Financial Corporation (NYSE:COF) has an Earnings ESP of +0.79% and a Zacks Rank of 3. It is also scheduled to come up with results on Apr 24.

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