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Analyst Blog

Ameriprise Financial, Inc. (AMP - Analyst Report) is scheduled to release second-quarter 2014 results tomorrow, Jul 29, after the market closes.

In the preceding quarter, Ameriprise delivered a 9.1% positive earnings surprise on the back of higher revenues, driven by strong assets under management (AUM) growth. Moreover, the company reported earnings beats in all four trailing quarters, with an average surprise of 6.6%.

Can Ameriprise maintain its earnings streak this quarter? Or will it disappoint? Let us see how things are shaping up for this announcement.

Factors to Impact Q2 Results

Dealing primarily in asset management and advisory businesses, Ameriprise does not face substantial threat from the overall sluggish and low interest rate environment. The company derives nearly more than 60% of its revenues (as of 2013) from fees.

Further, we believe that the overall strong equity market will continue to drive re-engagement of retail clients this quarter. Moreover, a strong AUM pipeline as well as rising demand for advisory services should benefit revenue growth.

On the other hand, the company’s aggressive marketing and advertising strategy will lead to a steady increase in general and administrative expenses. Also, Ameriprise’s continual recruitment of experienced advisors will expectedly elevate the compensation expenses. So we do not foresee any reversal in the rising expense trend this quarter.

Ameriprise’s quarterly activities failed to impress analysts. Hence, the Zacks Consensus Estimate for the quarter remained unchanged at $1.99 per share over the last 7 days.

Earnings Whispers

Our proven model does not conclusively show that Ameriprise is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as you can see below.

Zacks ESP:  The Earnings ESP for Ameriprise is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.99.
 
Zacks Rank: Ameriprise’s Zacks Rank #2 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call.  

Stocks That Warrant a Look

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

Fortress Investment Group LLC (FIG - Snapshot Report) has an Earnings ESP of +17.65% and carries a Zacks Rank #3 (Hold). It is scheduled to report results on Jul 31.

Oaktree Capital Group, LLC (OAK - Snapshot Report) has an Earnings ESP of +6.90% and carries a Zacks Rank #2. It is slated to report results on Jul 31.

The Earnings ESP for The Carlyle Group LP (CG - Snapshot Report) is +4.55% and it carries a Zacks Rank #3. It is expected to report results on Aug 6.

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