Ameriprise Financial (AMP - Free Report) remains well positioned to grow driven by consistent top-line rise, improving earnings performance and a strong balance sheet position. Also, it has an impressive capital deployment plan.
Yet, continued outflows in the Asset Management segment and higher expense levels are major concerns for Ameriprise. Despite these headwinds, this Zacks Rank #2 (Buy) stock seems like an attractive investment opportunity right now as it has been witnessing solid upward estimate revisions.
Over the last 30 days, the Zacks Consensus Estimate for earnings increased 1.3% and 3.5% for 2018 and 2019, respectively. Further, the stock has gained 41.4% over the past two years, widely outperforming the industry’s rally of 16.3%.
What Makes the Stock a Solid Pick
Earnings growth: Over the past three to five years, Ameriprise witnessed earnings per share growth of 13.3% compared with 4.1% increase for the industry. Further, the company’s earnings are projected to grow 19.6% in 2018 and 11.9% in 2019.
Moreover, it delivered an average positive earnings surprise of 9.5% in the trailing four quarters.
Revenue growth: Ameriprise constantly modifies its product and service-offering capacity to keep pace with dynamic market needs. This strategy along with asset growth helped the company in witnessing a rise in total net revenues (GAAP basis) at a CAGR of 1.8% over the last five years (2013-2017).
Further, the company’s projected sales growth rate of 8.7% and 7.4% for 2018 and 2019 respectively, ensures continuation of the upward trend in revenues.
Steady capital deployment: Ameriprise manages its capital levels efficiently. In April 2018, the company announced dividend hike for the 11th time since 2010. Also, the company has share repurchase plan in place. It raised its buyback authorization by an additional $2.5 billion, which is going to expire on Jun 30, 2019. Given a strong balance sheet and capital position, a dividend payout ratio lower than the industry and decent earnings growth, the company should be able to sustain its dividend payments.
Superior Return on Equity (ROE): The company’s ROE of 36.15% compares favorably with the industry’s ROE of 12.98%, reflecting its efficiency in utilizing shareholders’ funds.
Stock seems undervalued: Ameriprise seems undervalued when compared with the broader industry. Its current price-earnings (F1) and price-sales ratios are lower than the respective industry averages.
Also, the stock has a Value Score of A. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Other Stocks to Consider
Some other stocks from the finance space worth a look are AllianceBernstein Holding L.P. (AB - Free Report) , Lazard Ltd (LAZ - Free Report) and Regional Management Corp. (RM - Free Report) . All these stocks carry a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AllianceBernstein moved 2.4% upward for 2018, in the last 60 days. Its share price has increased 22.3% in the past 12 months.
Lazard’s Zacks Consensus Estimate was revised 2.5% upward for 2018, in the last 60 days. The company’s share price has increased 14.3% in the past 12 months.
The Zacks Consensus Estimate for Regional Management was revised 1.3% upward for 2018, in the last 60 days. Its share price has jumped 49.1% in the past year.
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