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6 Reasons to Bet on Ameriprise Financial (AMP) Stock Now

Zacks

Ameriprise Financial AMP remains well positioned to grow through strategic acquisitions, given its strong liquidity position. Further, the company’s efforts to modify product and service-offering capacity to keep pace with dynamic market needs will continue supporting its top-line growth.

A positive trend in estimate revisions also reflects optimism in the company’s earnings growth prospects. The Zacks Consensus Estimate for Ameriprise Financial’s fourth-quarter and 2017 earnings have moved up marginally over the last 30 days. As a result, the stock currently carries a Zacks Rank #2 (Buy).

Further, the stock has gained 51.2% over the past 12 months, widely outperforming the industry’s rally of 4%.

What Makes the Stock Attractive

Earnings Growth: Ameriprise Financial’s historical earnings per share (EPS) growth rate of 13.4% compares favorably with the industry average of 2.9%. In terms of projected EPS growth (F1/F0), the company is looking witness a rate of 9.7% versus the industry average of 8.2%.

Moreover, the company delivered an average positive earnings surprise of 12.6% in the trailing four quarters.

Revenue Growth: Ameriprise Financial constantly modifies its product and service-offering capacity to keep pace with dynamic market needs. This strategy helped the company in witnessing a rise in total net revenues (GAAP basis) at a compound annual growth rate (CAGR) of 3.4% over the last five years (2012–2016), despite a slight decline in 2016. The uptrend continued in 2017 as well. The company’s efforts to launch new products and rebound in the global equity markets will support top-line growth in the quarters ahead.

Steady Capital Deployment: Ameriprise Financial manages its capital levels efficiently. In April 2017, the company announced a dividend hike and raised the payout by 11%. Also, the company has a share repurchase plan in place. Notably, it raised its buyback authorization by an additional $2.5 billion, which will expire in 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.

Strong Inorganic Growth: Ameriprise Financial has grown inorganically and restructured its portfolio from time to time through acquisitions, sales and spin-offs. The company will continue to restructure its business operations with an aim to remain profitable by focusing on its core business. Moreover, the company looks forward to capitalizing on small strategic acquisitions. In July 2017, it acquired an independent broker-dealer firm, Investment Professionals, Inc. In 2016, Ameriprise's Columbia unit acquired New York-based Emerging Global Advisors, LLC to expand its smart beta capabilities.

Superior Return on Equity (ROE): The company’s ROE of 29.75% compares favorably with the industry’s ROE of 12.92%, reflecting its efficiency in utilizing shareholders’ funds.

Favorable Value Score: The stock currently has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. 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 top-ranked stocks from the same space are Waddell & Reed Financial WDR and Legg Mason LM, each sporting a Zacks Rank #1, and Affiliated Managers Group AMG carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here..

Waddell & Reed witnessed marginal upward earnings estimate revision for 2017, in the last 30 days. Its share price has increased 14.1% in the past 12 months.

Legg Mason’s Zacks Consensus Estimate was revised 1.4% upward for 2017, in the last 30 days. The company’s share price has increased 37.5% in the past 12 months.

The Zacks Consensus Estimate for Affiliated Managers was revised upward marginally for 2017, in the last 30 days. Its share price has increased 39.8% in the past 12 months.

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