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Ameriprise (AMP) Q4 Earnings Beat on Lower Costs, AUM Falls

Zacks Equity Research

Ameriprise Financial’s AMP fourth-quarter 2018 adjusted operating earnings per share of $3.80 surpassed the Zacks Consensus Estimate of $3.68. Further, the figure was 21% above the year-ago quarter level.

Results benefited from stable revenues and decline in operating expenses. However, fall in assets under management (AUM) and assets under administration (AUA) was an undermining factor.

After taking into consideration several significant items, net income in the reported quarter was $539 million or $3.76 per share, up significantly from $117 million or $1.15 per share in the prior-year quarter.

For 2018, adjusted earnings of $14.94 per share outpaced the Zacks Consensus Estimate of $14.69. Also, it was up 27% year over year. Net income (GAAP basis) was $2.1 billion or $14.20 per share, up from $1.48 billion or $9.44 per share in 2017.

GAAP Revenues Stable, Costs Down

Net revenues (on a GAAP basis) were $3.18 billion for the quarter, relatively stable year over year. Moreover, the figure was in line with the Zacks Consensus Estimate. On an operating basis, total adjusted net revenues were $3.17 billion, down marginally.

Net revenues (GAAP basis) for 2018 grew 6% to $12.84 billion. However, the top line lagged the Zacks Consensus Estimate of $12.91 billion.

Adjusted operating expenses (excluding mean reversion-related impacts) were $2.51 billion, down 2% from the prior-year quarter.

AUM & AUA Decline

As of Dec 31, 2018, total AUM and AUA was $822.73 billion, reflecting a year-over-year decline of 8%. The fall was mainly due to market depreciation and asset management outflows, partly offset advisor client net inflows.

Share Repurchases

In the reported quarter, Ameriprise repurchased 3.6 million shares for $436 million.

Our Take

Ameriprise’s efforts toward modifying its product and service-offering capacity are expected to support top-line growth in the quarters ahead. However, despite the fact that the company has been taking initiatives to strengthen expense management, advertising campaign and technology upgrades are likely to keep expenses elevated in the near term.

Ameriprise Financial, Inc. Price, Consensus and EPS Surprise

 

Ameriprise Financial, Inc. Price, Consensus and EPS Surprise | Ameriprise Financial, Inc. Quote

Ameriprise currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

BlackRock’s BLK fourth-quarter 2018 adjusted earnings of $6.08 per share missed the Zacks Consensus Estimate of $6.39. Further, the bottom line came in 2% lower than the year-ago figure.

Federated Investors, Inc. FII delivered a positive earnings surprise of 1.7% in fourth-quarter 2018. Earnings per share of 61 cents surpassed the Zacks Consensus Estimate of 60 cents. However, the figure compares unfavorably with the prior-year quarter earnings of $1.31.

Invesco IVZ reported fourth-quarter 2018 adjusted earnings of 44 cents per share, lagging the Zacks Consensus Estimate of 56 cents. Also, the figure was 39.7% below the prior-year quarter level.

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