On Jun 25, 2013, we reiterated our long-term recommendation on
Ameriprise Financial, Inc
) at Neutral. Our decision rests on the company's sound capital
deployment activities and solid first-quarter 2013 earnings.
However, we remain concerned about Ameriprise's mounting
Why the Reiteration?
Ameriprise's first-quarter operating earnings came in at $1.59
per share, marginally surpassing the Zacks Consensus Estimate of
$1.57. Also, this improved 9.7% from the year-ago earnings of
$1.45. Better-than-expected results were aided by top-line
growth, partially offset by a rise in operating expenses.
Further, assets under management and administration improved in
Following the result release, the Zacks Consensus Estimate went
up by 0.5% to $6.63 per share over the last 60 days. Moreover,
for 2014, the Zacks Consensus Estimate went up by 0.7% to $7.70
per share over the same time frame. The company currently holds a
Zacks Rank #2 (Buy).
In Apr 2013, Ameriprise hiked its quarterly cash dividend by
15.6% to 52 cents per share. Moreover, the board of directors
approved a new share repurchase program worth an additional $2
billion for purchasing its common shares through 2014.
Ameriprise has grown inorganically and restructured its portfolio
from time to time through acquisitions, sales and spin-offs. The
company is expected to continue with its restructuring activities
with an aim to remain profitable by focusing on its core
However, escalating expenses remain a major area of concern for
Ameriprise as it may hamper its profitability. Moreover, the
sluggish economic recovery and the existing low interest-rate
environment are expected to keep Ameriprise's financials under
pressure in the near future.
Other Banks to Consider
Some other financial stocks worth considering include
GAMCO Investors, Inc
Noah Holdings Limited
Virtus Investment Partners, Inc
). All these carry a Zacks Rank #1 (Strong Buy).
AMERIPRISE FINL (AMP): Free Stock Analysis
GAMCO INVESTORS (GBL): Free Stock Analysis
NOAH HLDGS LTD (NOAH): Free Stock Analysis
VIRTUS INVESTMT (VRTS): Free Stock Analysis
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