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Ameriprise (AMP) Beats on Q1 Earnings as Revenues Improve

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Ameriprise Financial Inc.’s (AMP - Free Report) first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Also, the figure represents a year-over-year increase of 24%.

Results came in better than expected, primarily due to a rise in revenues. Also, growth in assets under management (AUM) and assets under administration (AUA) were on the positive side. However, higher expenses hurt the results to some extent.

After considering several significant items, net income for the reported quarter came in at $403 million or $2.52 per share, up from $364 million or $2.09 per share in the prior-year quarter.
 

Revenue Growth Offsets Increase in Costs

Net revenue (on a GAAP basis) was $2.90 billion, up 5% from the year-ago quarter. However, the figure was in-line with the Zacks Consensus Estimate.

On an operating basis, total net revenue came in at $2.86 billion, up 3% from the prior-year quarter. This reflected strong net revenue growth in Advice & Wealth Management segment.

Operating expenses came in at $2.34 billion, 2% higher than the prior-year quarter. The increase was primarily due to a rise in general and administrative expense.

Strong AUM & AUA

As of Mar 31, 2017, total AUM and AUA was $817.59 billion, up 6% year over year. Net outflows from Asset Management segment and the unfavorable impact of foreign exchange rates were more than offset by Ameriprise’s advisor client net inflows and market appreciation.

Capital Deployment

In the reported quarter, Ameriprise repurchased 2.9 million shares for $357 million. Additionally, the Board of Directors authorized an additional share repurchase of $2.5 billion, which expires on Jun 30, 2019.

Concurrent with the earnings release, the company announced a regular quarterly cash dividend of 83 cents per share, a hike of 11% from the prior payout. The dividend will be paid on May 19, 2017 to shareholders on record as of May 8.

Our Take

Ameriprise remains well positioned to grow inorganically through strategic acquisitions. The company recently announced that it has agreed to acquire Investment Professionals, Inc. Supported by a solid balance sheet, such acquisitions will aid the company’s profitability in the near term.

However, continued outflows and elevated expenses remain key concerns, which are likely to hurt its financials.

At present, Ameriprise carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

Janus Capital Group, Inc.’s first-quarter 2017 adjusted earnings per share of 23 cents surpassed the Zacks Consensus Estimate of 21 cents. Better-than-expected results were driven by an increase in revenues. However, rise in operating expenses was a concern.

BlackRock, Inc. (BLK - Free Report) reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. The better-than-expected number was largely driven by an improvement in revenues, partially offset by an increase in expenses.

Lazard Ltd. (LAZ - Free Report) is expected to report results on Apr 27.

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