On Apr 5, 2013, we reaffirmed our long-term Neutral
Ameriprise Financial Inc.
). Our decision is based on its robust capital deployment actions
and strong liquidity position. However, escalating expenses and
unsettling macroeconomic factors are expected to remain a drag on
its profitability in the near to mid term.
AMERIPRISE FINL (AMP): Free Stock Analysis
APOLLO GLOBAL-A (APO): Free Stock Analysis
BANK OF AMER CP (BAC): Free Stock Analysis
SEI INVESTMENTS (SEIC): Free Stock Analysis
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Why the Neutral Stance?
Over the past 60 days, there was a marginal upward estimate
revision for 2013. Further, estimates for 2014 have slightly
improved over the same period. In addition, over the past 4
quarters, Ameriprise has delivered 3 positive earnings surprises
with an average beat of 1.8%. However, it carries a Zacks rank #2
Further, the Zacks Consensus Estimate for first-quarter 2013 is
pegged at $1.56 on revenue expectations of 2,612 million. The
company had delivered better-than-expected fourth-quarter
earnings on the back of augmented top line, partially offset by
A well-diversified portfolio compared with its industry peers
along with powerful capital deployment actions are the positives
for the company. Also, growth through acquisitions has helped it
expand significantly and better serve the dynamic markets. The
recent and most notable acquisition is the asset management
business of Columbia Management from
Bank of America Corporation
) in 2010. This acquisition has significantly elevated the
performance of Ameriprise's retail mutual fund and institutional
However, escalating expenses remain a major headwind for the
company. Although general and administrative expenses and
interest and debt expenses have declined in 2012, distribution
expense has increased from 2011. Though the advertising campaign
and technology upgrades will be beneficial for Ameriprise in the
long run, swelling expenses may prove harmful for its
profitability. In addition, the existing low interest rate
environment and the ongoing outflows related to the integration
of Columbia Management will keep Ameriprise's financials under
pressure in the near term.
Other Stocks to Consider
Other stocks that are performing better in the same sector
Apollo Global Management, LLC
SEI Investments Co.
). Both these companies carry a Zacks Rank #1 (Strong Buy).