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Is an Earnings Beat in the Offing for Ameriprise (AMP) in Q4?

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Ameriprise Financial, Inc. (AMP - Free Report) is scheduled to report fourth-quarter and 2021 results on Jan 26, after market close. Its revenues and earnings in the to-be-reported quarter are anticipated to have witnessed a rise on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Higher revenues along with an improvement in assets under management (AUM) and assets under administration (AUA) balance supported the results. However, a rise in expenses was a headwind.

Ameriprise has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 6.5%.

Ameriprise Financial, Inc. Price and EPS Surprise

 

Ameriprise Financial, Inc. Price and EPS Surprise

Ameriprise Financial, Inc. price-eps-surprise | Ameriprise Financial, Inc. Quote

The Zacks Consensus Estimate for the company’s fourth-quarter earnings is pegged at $5.77 per share, which indicates a rise of 27.4% from the prior-year quarter’s reported number. The estimate has been unchanged over the past seven days.

The consensus estimate for total sales is pegged at $3.56 billion, which indicates a 13.5% rise from the year-ago quarter’s reported figure.

Estimates & Key Factors to Note for Q4

The Zacks Consensus Estimate for management and financial advice fees (constituting more than 60% of the company’s total net revenues) is pegged at $2.41 billion, which suggests a rise of 2% from the prior quarter’s reported number.

The consensus estimate for distribution fees of $501 million indicates a rise of 9.4% sequentially. The consensus estimate for premiums, policy and contract charges is pegged at $356 million, indicating a significant sequential rise.

However, the consensus estimate for net investment income of $204 million suggests a decline of 73.6% from the previous quarter’s reported figure. Likewise, the consensus mark for other revenues of $89 million indicates a 21.2% sequential decline.

Ameriprise’s Asset Management segment has been recording net outflows over the past few years, which negatively impacted asset growth. Nevertheless, in 2020 and the first nine months of 2021, the segment recorded overall net inflows. Given the expectation of a similar trend in the to-be-reported quarter, the segment’s asset balances are likely to have been positively impacted.

Likewise, based on the expectations of improved advisor productivity, the Advice & Wealth Management segment is expected to have recorded growth in assets in the fourth quarter.

While Ameriprise’s initiatives to focus on cost management have resulted in controlled general and administration expenses in the past, overall costs are anticipated to have been elevated in the to-be-reported quarter due to costs related to technology upgrades.

Earnings Whispers

According to our quantitative model, the chances of Ameriprise beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to be confident of an earnings beat.

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

Earnings ESP: Ameriprise has an Earnings ESP of +0.69%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

Key Development in Q4

In November 2021, Ameriprise completed the previously announced deal with Canada-based BMO Financial Group to take over its EMEA asset management operations. The all-cash transaction, valued at £615 million ($829 million), was announced in April.

The move has helped strengthen Ameriprise’s wealth and asset management businesses. Ameriprise expected the acquisition to add additional value by including certain capabilities like “Responsible Investment, Liability Driven Investing, Fiduciary/outsourced Management and European Real Estate,” which can be leveraged globally.

Notably, at the time of the deal announcement, Ameriprise expected the acquisition to be accretive in 2023, with an internal rate of return of 20%.

Other Stocks to Consider

A few other finance stocks, which you may want to consider as these too have the right combination of elements to post an earnings beat in their upcoming releases per our model, are Prosperity Bancshares (PB - Free Report) , LendingClub Corporation (LC - Free Report) and Ares Capital Corporation (ARCC - Free Report) .

Prosperity Bancshares is slated to report quarterly earnings on Jan 26. PB, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.55%.

LendingClub is also slated to report quarterly earnings on Jan 26. LC, which sports a ZacksRank #1 (Strong Buy) at present, has an Earnings ESP of +7.81%.

Ares Capital is slated to report quarterly results on Feb 9. ARCC currently has an Earnings ESP of +11.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.