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Ameriprise (AMP) Beats on Q4 Earnings as Expenses Decline

Ameriprise Financial Inc. 's AMP fourth-quarter 2016 operating earnings per share of $2.73 easily surpassed the Zacks Consensus Estimate of $2.43. Also, the figure represents a year-over-year increase of 11%.

The quarterly results came in better than expected, primarily due to a decline in expenses. Also, growth in assets under management ("AUM") and assets under administration ("AUA") were on the positive side. However, a fall in top line hurt the results to some extent.

After considering several significant items, net income attributable to shareholders for the reported quarter came in at $400 million or $2.46 per share, up from $357 million or $2.00 per share in the prior-year quarter.

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For 2016, operating earnings (excluding unlocking) of $9.40 per share significantly outpaced the Zacks Consensus Estimate of $9.16. Moreover, it was 3% above the prior-year figure. After considering several significant items, net income attributable to shareholders was $1.31 billion, down 16% year over year.

Lower Costs Support Results as Revenues Fall

Net revenue (on a GAAP basis) for the quarter was $3.06 billion, down 1% from the year-ago quarter. However, the figure surpassed the Zacks Consensus Estimate of $2.98 billion.

For 2016, GAAP net revenue declined 4% year over year to $11.70 billion. Also, it was below the Zacks Consensus Estimate of $11.80 billion.

On an operating basis, total net revenue came in at $2.94 billion, a decline of 1% from prior-year quarter. This reflected strong net revenue growth in Advice & Wealth Management segment, which was partially offset by lower Asset Management revenues.

Operating expenses came in at $2.40 billion, down nearly 1% from the prior-year quarter. The decline was primarily due to fall in all expense components except distribution expenses and amortization of deferred acquisition costs.

Strong AUM & AUA

As of Dec 31, 2016, total AUM and AUA totaled $787.4 billion, up 1% year over year. Ameriprise's advisor client net inflows and market appreciation were partially offset by the net outflows from Asset Management and the unfavorable impact of foreign exchange rates.

Share Repurchases

In the reported quarter, Ameriprise repurchased 3.8 million shares for $402 million.

Our Take

Ameriprise's discipline in financial planning as well as strength in product development and advice will help it meet the dynamic market needs and support top-line growth. Also, the company's inorganic growth strategy will further aid its profitability in the near term.

However, the company's fixed interest costs and claims continue to remain at high levels. In addition, continued equity market volatility and outflows in the Asset Management segment will likely hurt the company's financials in the near term.

AMERIPRISE FINANCIAL SERVICES, INC. Price, Consensus and EPS Surprise

AMERIPRISE FINANCIAL SERVICES, INC. Price, Consensus and EPS Surprise | AMERIPRISE FINANCIAL SERVICES, INC. Quote

At present, Ameriprise carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other Asset Managers

Janus Capital Group, Inc.'s JNS fourth-quarter 2016 adjusted earnings per share of 20 cents lagged the Zacks Consensus Estimate of 24 cents. A fall in revenues and higher expenses were primarily responsible for the lower-than-expected results.

BlackRock, Inc. BLK reported fourth-quarter 2016 adjusted earnings of $5.14 per share, which surpassed the Zacks Consensus Estimate of $5.02. The better-than-expected number was largely driven by a decline in total expenses and higher revenues.

Affiliated Managers Group Inc. AMG reported fourth-quarter 2016 economic earnings of $3.80 per share, which outpaced the Zacks Consensus Estimate of $3.70. Better-than-expected results were driven by lower operating expenses. However, lower revenues were an undermining factor.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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