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AMERIPRISE (AMP) Up 3.5% Since Earnings Report: Can It Continue?

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About a month has gone by since the last earnings report for AMERIPRISE FINANCIAL SERVICES (AMP - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Ameriprise Q3 Earnings Beat Estimates, Costs Decline

Ameriprise’s third-quarter 2017 operating earnings per share of $3.53 comfortably surpassed the Zacks Consensus Estimate of $2.86. Also, the figure compares favorably with $1.37 per share registered in the year ago quarter.

Results benefitted from a decline in expenses. Also, growth in assets under management (AUM) and assets under administration (AUA) were on the positive side. However, a slight decline in revenues acted as a headwind.

After taking into consideration several significant items, net income for the reported quarter came in at $503 million or $3.24 per share, up from $215 million or $1.30 per share in the prior-year quarter.

Revenues & Expenses Decline

Net revenue (on a GAAP basis) was $2.98 billion, reflecting a marginal decline from the year-ago quarter figure of nearly $3 billion. However, the figure marginally surpassed the Zacks Consensus Estimate of $2.95 billion.

On an operating basis, total net revenues came in at $2.97 billion, increasing marginally from the prior-year quarter.

Operating expenses came in at $2.27 billion, decreasing 15.9% from the prior-year quarter.

Strong AUM & AUA

As of Sep 30, 2017, total AUM and AUA was $869.5 billion, reflecting an increase of 9% year over year, primarily driven by Ameriprise advisor client net inflows.

Capital Deployment

In the reported quarter, Ameriprise repurchased 2.3 million shares for $333 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.

The expense ratio on protection for Auto and Home is projected to be in mid-18% for 2017. In AWM, general and administrative expenses are anticipated to be up nearly 3-4% year over year in 2017.

Management expects to continue returning 90–100% of operating earnings to its shareholders in 2017.

The company expects effective tax rate to be roughly 22% in 2017.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter

VGM Scores

At this time, the stock has a poor Growth Score of F, however 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.

Our style scores indicate that the stock is solely suitable for value investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.


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