Ameriprise Financial Inc
) second-quarter 2012 operating earnings of $1.13 per share,
substantially lagged both the Zacks Consensus Estimate and the
year-ago earnings of $1.33. Moreover, operating earnings totaled
$254 million in the reported quarter, declining 23.7% from $333
million in the prior-year quarter.
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Lower-than-expected results were primarily attributable to reduced
top line, which was partly mitigated by lower operating expenses.
Moreover, assets under management (AUM) and assets under
administration (AUA) deteriorated marginally in the quarter.
However, the ongoing capital deployment activities were impressive.
After taking into consideration net realized gains or losses,
integration and restructuring charges, market impact on variable
annuity guaranteed living benefits, amortization of deferred
acquisition costs (DAC) and deferred sales inducement costs (DSIC)
as well as income or loss from discontinued operations,
Ameriprise's net income from continuing operations came in at $224
million or 99 cents per share. This compares with net income of
$319 million or $1.27 per share in the year-ago quarter.
Performance in Detail
On operating basis, Ameriprise's net revenues for the quarter under
review, fell 2.9% year over year to $2.52 billion. The decline was
primarily due to reduced net investment income partly offset by
increase in fee revenues aided by Ameriprise advisor client net
inflows. Moreover, net revenue was below the Zacks Consensus
Estimate of $2.56 billion.
Similarly, operating expenses came in at $2.12 billion, marginally
dipping 0.7% from $2.13 billion in the year-ago quarter. The fall
reflects lower benefits, claims, losses and settlement costs along
with reduced interest and debt costs. These were partially offset
by increases in amortization of deferred acquisition costs, general
and administrative expenses and distribution costs.
Total AUM was $543.57 billion, down 3.5% sequentially and 2.9% on a
year-over year basis. Total AUA came in at $111.17 billion,
slipping 0.2% from the prior quarter, but slightly improving 0.6%
from the year-ago period.
Concurrent with the earnings release, Ameriprise announced
quarterly cash dividend of 35 cents per share payable on August 17
to the shareholders of record as of August 3.
Share Repurchase Update
During the second quarter, Ameriprise bought back 7 million shares
of its common stock for $350 million.
) second-quarter 2012 adjusted earnings substantially beat the
Zacks Consensus Estimate, mainly facilitated by lower operating
expenses. However, declining top line and reduced assets under
management were the primary headwinds.
Ameriprise's consistent capital deployment activities continue to
boost the investors' confidence in the stock. The company's
prudent expense management and robust balance sheet are also among
the positives. Further, improvement in retail client activity is
expected to fuel the operating leverage in the upcoming quarters.
Moreover, with the completion of the integration of Columbia
Management, the company anticipates to reap profits from the
However, the prevailing low interest rate environment and stringent
regulatory landscape will keep Ameriprise's financials slightly
under strain in the near term.
Ameriprise currently retains a Zacks # 4 Rank, which translates
into a short-term Sell rating.