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Here's Why it is Best to Hold on to Ameriprise (AMP) Stock Now
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Ameriprise Financial (AMP - Free Report) is well-positioned for top-line growth in the quarters ahead, given its constant business-restructuring efforts (including the sale of the Home & Auto division and launch of the federal savings bank) along with its diversified investment portfolio.
However, significant outflows in the company’s Asset Management segment and steadily rising expenses are expected to hurt the bottom line to some extent, which makes us apprehensive.
In fact, the Zacks Consensus Estimate for its current-year earnings has been unchanged over the past seven days, reflecting that analysts are maintaining a neutral stance regarding its earnings growth potential. Thus, the company currently carries a Zacks Rank #3 (Hold).
Over the past six months, shares of Ameriprise have gained 43% compared with 25.7% growth recorded by the industry.
Looking at its fundamentals, the company’s net revenues (GAAP basis) witnessed a CAGR of 3.2% over the last four years (2016-2019). Though GAAP revenues declined in the first half of 2020, the company’s efforts to launch products are likely to keep supporting top-line growth in the quarters ahead.
Moreover, it has been constantly focusing on core operations to remain profitable. It has grown inorganically and restructured its business from time to time through divestitures and spin-offs. Also, it plans to offer a range of banking and credit products through its federal savings bank — Ameriprise Bank — to its wealth management clients. The initiatives are expected to further support financials.
Further, the company’s capital-deployment activities remain impressive. Though it suspended buybacks amid the coronavirus-led concerns in mid-March, it resumed the same in May. In fact, in September 2020, the company announced an additional repurchase plan worth $2.5 billion (expiring in September 2022). This is in addition to its previous plan announced in February 2019, which will expire in March 2021. Thus, given a strong balance sheet position and decent earnings growth, the company is expected to be able to sustain efficient capital deployment plans in the future.
Notably, as of Jun 30, 2020, Ameriprise’s total cash balance was higher than the total debt. Given the sufficient cash balance, it is expected to continue to be able to meet debt obligations in the near term, even if the economic situation worsens.
However, the company’s expenses (GAAP basis) increased, witnessing a CAGR of 2% over the last six years (2014-2019). While expenses declined in the first half of 2020, overall costs are expected to remain elevated in the near term due to advertising campaign, hiring and technology upgrades.
Also, the Asset Management segment, which remains one of the major sources of Ameriprise’s revenues (accounting for 23.7% of total adjusted operating net revenues in the first six months of 2020), has been continuously witnessing significant outflows. While the segment witnessed net inflows of $238 million in the first half of 2020, this may not continue in the quarters ahead amid a tough operating backdrop. Thus, this is likely to affect the segment’s performance.
Stocks to Consider
A few stocks from the finance space worth considering are mentioned below.
Moodys Corporation (MCO - Free Report) has witnessed an upward earnings estimate revision of 2% for the current year over the past 60 days. Its shares have lost 2.1% over the past three months. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Interactive Brokers Group, Inc.’s (IBKR - Free Report) earnings estimates have been revised 2.3% upward for the current year over the past 60 days. Over the past three months, the Zacks Rank #2 company has gained 2.8%.
BlackRock, Inc.’s (BLK - Free Report) earnings estimates for the current year have been revised 1.9% upward over the past 60 days. Its shares have witnessed a rise of 4% over the past three months. The company currently carries a Zacks Rank #2.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Here's Why it is Best to Hold on to Ameriprise (AMP) Stock Now
Ameriprise Financial (AMP - Free Report) is well-positioned for top-line growth in the quarters ahead, given its constant business-restructuring efforts (including the sale of the Home & Auto division and launch of the federal savings bank) along with its diversified investment portfolio.
However, significant outflows in the company’s Asset Management segment and steadily rising expenses are expected to hurt the bottom line to some extent, which makes us apprehensive.
In fact, the Zacks Consensus Estimate for its current-year earnings has been unchanged over the past seven days, reflecting that analysts are maintaining a neutral stance regarding its earnings growth potential. Thus, the company currently carries a Zacks Rank #3 (Hold).
Over the past six months, shares of Ameriprise have gained 43% compared with 25.7% growth recorded by the industry.
Looking at its fundamentals, the company’s net revenues (GAAP basis) witnessed a CAGR of 3.2% over the last four years (2016-2019). Though GAAP revenues declined in the first half of 2020, the company’s efforts to launch products are likely to keep supporting top-line growth in the quarters ahead.
Moreover, it has been constantly focusing on core operations to remain profitable. It has grown inorganically and restructured its business from time to time through divestitures and spin-offs. Also, it plans to offer a range of banking and credit products through its federal savings bank — Ameriprise Bank — to its wealth management clients. The initiatives are expected to further support financials.
Further, the company’s capital-deployment activities remain impressive. Though it suspended buybacks amid the coronavirus-led concerns in mid-March, it resumed the same in May. In fact, in September 2020, the company announced an additional repurchase plan worth $2.5 billion (expiring in September 2022). This is in addition to its previous plan announced in February 2019, which will expire in March 2021. Thus, given a strong balance sheet position and decent earnings growth, the company is expected to be able to sustain efficient capital deployment plans in the future.
Notably, as of Jun 30, 2020, Ameriprise’s total cash balance was higher than the total debt. Given the sufficient cash balance, it is expected to continue to be able to meet debt obligations in the near term, even if the economic situation worsens.
However, the company’s expenses (GAAP basis) increased, witnessing a CAGR of 2% over the last six years (2014-2019). While expenses declined in the first half of 2020, overall costs are expected to remain elevated in the near term due to advertising campaign, hiring and technology upgrades.
Also, the Asset Management segment, which remains one of the major sources of Ameriprise’s revenues (accounting for 23.7% of total adjusted operating net revenues in the first six months of 2020), has been continuously witnessing significant outflows. While the segment witnessed net inflows of $238 million in the first half of 2020, this may not continue in the quarters ahead amid a tough operating backdrop. Thus, this is likely to affect the segment’s performance.
Stocks to Consider
A few stocks from the finance space worth considering are mentioned below.
Moodys Corporation (MCO - Free Report) has witnessed an upward earnings estimate revision of 2% for the current year over the past 60 days. Its shares have lost 2.1% over the past three months. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Interactive Brokers Group, Inc.’s (IBKR - Free Report) earnings estimates have been revised 2.3% upward for the current year over the past 60 days. Over the past three months, the Zacks Rank #2 company has gained 2.8%.
BlackRock, Inc.’s (BLK - Free Report) earnings estimates for the current year have been revised 1.9% upward over the past 60 days. Its shares have witnessed a rise of 4% over the past three months. The company currently carries a Zacks Rank #2.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>