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What's in the Cards for Ameriprise (AMP) in Q4 Earnings?

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Ameriprise Financial (AMP - Free Report) is scheduled to report fourth-quarter and 2018 results on Jan 30, after the market closes. Its earnings and revenues for the to-be-reported quarter are expected to grow year over year.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an improvement in revenues. Further, growth in assets under management (AUM) and assets under administration (AUA) was on the positive side. However, rise in expenses acted as a headwind.

The company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 4.6%.

However, activities of the company during the fourth quarter did not impress analysts. Thus, the Zacks Consensus Estimate for earnings of $3.68 for the to-be-reported quarter has moved 4.4% lower over the past 30 days. Nevertheless, the figure represents growth of 12.9% on a year-over-year basis.

The Zacks Consensus Estimate for sales is pegged at $3.18 billion, which reflects an improvement of nearly 1% year over year.

Before we take a look at what our quantitative model predicts, let’s check the factors that are likely to influence the quarter’s results.

Factors to Influence Q4 Results

Based on expectations of improved advisor productivity, the Advice & Wealth Management segment is likely to record growth in assets during the fourth quarter. Moreover, despite continued outflows in the Asset Management segment, its total AUM is expected to improve.

Thus, supported by overall growth in AUM, the company’s management, financial advice and service fee is likely to improve. The Zacks Consensus Estimate for the same is pinned at $1.74 billion, reflecting growth of 1.1% year over year.

The Zacks Consensus Estimate for distribution fees for the to-be-reported quarter is pegged at $497 million, which reflects rise of 8% year over year.

The consensus estimate for other revenues shows that this component is also expected to improve during the fourth quarter. Its Zacks Consensus Estimate is pegged at $293 million, which represents rise of 5.8% year over year.

Further, the Zacks Consensus Estimate for net investment income for the fourth quarter is pegged at $357 million, which represents a marginal increase from the year-ago quarter. Further, the consensus estimate for premiums is pegged at $362 million, representing nearly 1% increase from the year-ago quarter.

On cost front, operating expenses are expected to increase in the to-be-reported quarter, driven by advertising campaign and technology upgrades.

Management expects G&A expenses to increase 4-6% in 2018.

Here is what our quantitative model predicts:

We can’t conclusively predict whether Ameriprise will be able to beat the Zacks Consensus Estimate in the fourth quarter. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds 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 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #3. While this increases the predictive power of ESP, we also need a positive ESP to be confident of an earnings beat.

Stocks That Warrant a Look

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

BOK Financial Corporation (BOKF - Free Report) is slated to report results on Jan 30. It has an Earnings ESP of +1.08% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Credit Acceptance Corporation (CACC - Free Report) is also slated to release results on Jan 30. It has an Earnings ESP of +0.21% and carries a Zacks Rank #3.

Ares Capital Corporation (ARCC - Free Report) has an Earnings ESP of +1.10% and carries a Zacks Rank of 3. The company is slated to release results on Feb 12.

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