Ameriprise Financial (AMP - Free Report) is well poised for growth, driven by restructuring and streamlining efforts, and focus on core operations. Also, the company’s efficient capital deployment activities show its strong balance sheet position and will continue enhancing shareholder value. However, persistently rising operating expenses and outflows in the Asset Management segment are major near-term headwinds.
Looking at the fundamentals, Ameriprise’s net revenues (GAAP basis) witnessed a CAGR of 1.1% over the last five years (2014-2018). Further, amid a challenging operating backdrop, the same remained relatively stable in the first half of 2019.
With an aim to keep pace with the changing market needs, Ameriprise has been modifying its products and services consistently. Its efforts to launch new products are likely to further support top-line growth.
Additionally, Ameriprise remains focused on strengthening its core operations. In sync with this, in April, it announced a deal to divest the Ameriprise Auto & Home business. Further, the company plans to offer a range of banking and credit products through its federal savings bank – Ameriprise Bank – to its wealth management clients in the quarters ahead. These initiatives are further expected to support the company's financials.
Nonetheless, elevated levels of outflows in the Asset Management segment, which is one of the major sources of the company’s revenues, is a cause for concern. Outflows are expected to continue in the upcoming quarters amid tough operating backdrop, which will keep affecting the segment’s performance.
Further, over the last five years (ended 2018), the company’s expenses witnessed a CAGR of 1.6%. Elevated costs, mainly because of advertising campaign and technology upgrades, are expected to hurt bottom-line growth to some extent in the quarters ahead.
Stocks to Consider
Few investment management stocks worth a look are T. Rowe Price Group, Inc. (TROW - Free Report) , SEI Investments Company (SEIC - Free Report) and Federated Investors, Inc. (FII - Free Report) .
T. Rowe Price’s earnings estimates for the current year have been moving upward over the past 30 days. Also, its shares have rallied more than 28% over the past two years.
SEI Investments’ earnings estimates for 2019 have been revised upward over the past 30 days. Over the past two years, the company’s shares have risen almost 1%.
Federated Investors’ 2019 earnings estimates have been moving upward over the past 30 days. Further, its shares have rallied more than 18% in the past two years.
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