Ameriprise Financial, Inc. (AMP Quick QuoteAMP - Free Report) is scheduled to report second-quarter 2016 results after the market closes on Tuesday, Jul 26.

Last quarter, Ameriprise’s earnings lagged the Zacks Consensus Estimate, adversely impacted by lower revenues. Results also reflected significant equity markets volatility.

Nonetheless, Ameriprise has a decent earnings surprise history, as evident from the chart below:

AMERIPRISE FINL Price and EPS Surprise

AMERIPRISE FINL Price and EPS Surprise | AMERIPRISE FINL Quote

So, will Ameriprise be able to reverse the trend this earnings season or will it succumb to industry-wide challenges? Let’s check how things have shaped up prior to the earnings release.

Factors to Impact Results

We expect equity market volatility that triggered notable outflows in the Asset Management segment in the previous two quarters to get reflected in the upcoming announcement as well. Also, lower assets under management (down 5% year over year) at the beginning of the second quarter are expected to hurt Ameriprise’s revenue-generating capabilities in the upcoming release.

Further, weakness in equity markets experienced during the quarter will likely exert strain on Ameriprise’s margin. Moreover, costs associated with advertising and technology upgrades are anticipated to ramp up the company’s expenses.

Also, owing the new DOL regulation, operating expenses are likely to slightly trend up during the quarter. Hence, on the whole, total operating expenses should move up in the second quarter.

Nevertheless, we expect Advice & Wealth Management segment’s (AWM) performance to primarily drive Ameriprise’s second-quarter results. The AWM segment had delivered strong growth in assets and revenues in the previous quarter. Based on expectations of improved advisor productivity, the same is expected to continue in the to-be-reported quarter.

Earnings Whispers

Our proven model indicates that chances of Ameriprise beating earnings estimate this time is very low. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) to have a significantly higher chance of beating earnings.

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 $2.27.

Zacks Rank: Ameriprise carries a Zacks Rank #4 (Sell). As it is, we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Additionally, Ameriprise’s activities during the quarter were inadequate to win analysts' confidence. The company witnessed four downward revisions in earnings estimates (versus no upward revision) over the last 30 days. Further, the Zacks Consensus Estimate declined 1.7% over the last seven days.

Stocks That Warrant a Look

Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming announcements.

Earnings ESP for Cullen/Frost Bankers, Inc.  (CFR Quick QuoteCFR - Free Report) is +0.96%. The company carries a Zacks Rank #3 and is slated to report on Jul 27.

LPL Financial Holdings Inc. (LPLA Quick QuoteLPLA - Free Report) , which is expected to report on Jul 28, has an Earnings ESP of +2.33% and a Zacks Rank #3.

Federated Investors, Inc. has an Earnings ESP of +2.13% and a Zacks Rank #3. The company is slated to release results on Jul 28.

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