Why Is Ameriprise (AMP) Down 12.5% Since Last Earnings Report?

It has been about a month since the last earnings report for Ameriprise Financial Services (AMP). Shares have lost about 12.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ameriprise due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Ameriprise’s Q2 Earnings Beat Estimates, Costs Increase

Ameriprise’s second-quarter 2019 adjusted operating earnings per share of $4.06 surpassed the Zacks Consensus Estimate of $4.00. Further, the figure was 14% higher than the year-ago quarter level.

Results benefited from growth in assets under management (AUM) and assets under administration (AUA) along with higher revenues. However, rise in operating expenses was a headwind.

After taking into consideration several significant items, net income was $492 million or $3.57 per share, up from $462 million or $3.10 per share reported in the prior-year quarter.

Revenues Improve, Costs Rise

Net revenues (on a GAAP basis) were $3.25 billion, up 1.5% year over year. Moreover, the figure beat the Zacks Consensus Estimate of $2.95 billion. On an operating basis, total adjusted net revenues were also nearly $3.15 billion, up 3.2% year over year.

Adjusted operating expenses were $2.57 billion, up nearly 2.4% from the prior-year quarter.

AUM & AUA Improve

As of Jun 30, 2019, total AUM and AUA was $915.90 billion, up 2.8% year over year.

Share Repurchase Update

In the reported quarter, Ameriprise repurchased 3 million shares for $436 million.

Outlook

Effective tax rate is expected to be nearly 16% for 2019.

The company is well poised to return roughly 110% of operating earnings shareholders in 2019 and fund bank capital requirements, while evaluating uses of excess capital. Notably, the company expects to have roughly $2.5 billion in excess capital by the year end.

Distribution fees are expected to improve year over year in 2019.

Pre-tax margin for Asset Management segment is expected to remain under pressure in the quarters ahead.

Long-Term Outlook

Management targets 6-8% growth in adjusted operating net revenues. Further, adjusted operating earnings are projected to grow in the range of 12-15%. Adjusted operating return on equity excluding AOCI is anticipated to be 19-23%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Ameriprise has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Ameriprise has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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