Last quarter, Ameriprise's earnings lagged the Zacks Consensus Estimate primarily due to escalated operating expenses. However, a rise in revenues and an increase in assets under management and assets under administration were on the positive side.
Despite the earnings miss, the company's share price increased nearly 11.2% during the three months ended Dec 31, 2016. Also, the Zacks Consensus Estimate has remained stable in the last seven days.
However, Ameriprise does not have a decent earnings surprise history, as evident from the chart below:
AMERIPRISE FINANCIAL SERVICES, INC. Price and EPS Surprise
Our proven model indicates that Ameriprise is less likely to beat the earnings estimates this time too. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) to have a significantly higher chance of beating estimates. This is not the case here, as elaborated below.
(You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .)
Zacks ESP : The Earnings ESP for Ameriprise is -0.41%. This is because the Most Accurate estimate of $2.42 is lower than the Zacks Consensus Estimate of $2.43.
Zacks Rank : Ameriprise carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need a positive Earnings ESP to be confident of an earnings surprise call.
Factors to Influence Q4 Results
Ameriprise's persistent efforts in improving business are expected to have a positive impact on profitability during the quarter.
Further, we expect Advice & Wealth Management segment's (AWM) performance to drive the company's results. The AWM segment had delivered growth in assets in the previous quarter. Based on expectations of improved advisor productivity, the same is expected to continue in the to-be-reported quarter.
The company expects margin expansion in the AWM segment to continue over time, assuming no significant market disruptions will take place.
However, management believes that there will be seasonally higher expenses in the fourth quarter for AWM segment, where project spending and advertising tend to rise. Moreover, costs associated with advertising and technology upgrades are anticipated to ramp up the company's overall expenses.
Stocks that Warrant a Look
Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming announcements.
Waddell & Reed Financial, Inc. WDR has an Earnings ESP of +14.63% and carries a Zacks Rank #3. The company is slated to release results on Jan 31.
Evercore Partners Inc. EVR , another Zacks Rank #3 stock, has an Earnings ESP of +4.48%. It is scheduled to report results on Feb 1.
LPL Financial Holdings Inc. LPLA is scheduled to report results on Feb 9. The company has an Earnings ESP of +2.78% and carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .
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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.