We reaffirmed our long-term recommendation on Ameriprise Financial, Inc. (AMP) at Neutral. This was based on the company's third-quarter 2013 earnings that outpaced the Zacks Consensus Estimate. Further, we expect the company to benefit from its efficient capital deployment activities, strategic acquisitions and strong balance sheet. However, a sluggish economic recovery and the existing low interest-rate environment will keep the company’s financials under pressure in the near term.
Why This Stance?
Amerprise’s third-quarter 2013 earnings surpassed the Zacks Consensus Estimate. Further, this compared favorably with the year-ago earnings. Results reflected top-line growth along with improved AUM and assets under administration.
Amerprise enjoys a competitive edge over its peers owing to its diverse and innovative portfolio of products and services that cater to the dynamic market needs. Also, the company has been raising its quarterly cash dividend since 2010, reflecting its long-term strategy to enhance shareholder value.
Further, over the last 60 days, the Zacks Consensus Estimate for 2013 advanced 2.5% to $6.99 per share. Also, for 2014, it moved north 1.4% to $7.93 per share. As a result, Amerprise currently carries a Zacks Rank #2 (Buy).
However, Amerprise’s asset management business is expected to have a negative impact owing to the considerable outflows. Further, the current macro economic headwinds across the industry and the company’s continuous increase in costs will put considerable pressure on its bottom-line growth.
Other Stocks to Consider
Some better-ranked investment management firms include Artisan Partners Asset Management Inc. (APAM), Kohlberg Kravis Roberts & Co. L.P. (KKR) and Virtus Investment Partners, Inc. (VRTS). All these stocks carry a Zacks Rank #1 (Strong Buy).