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Should Value Investors Buy Ameriprise Financial Services (AMP) Stock?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Ameriprise Financial Services (AMP). AMP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 9.30. This compares to its industry's average Forward P/E of 13.43. AMP's Forward P/E has been as high as 10.41 and as low as 6.70, with a median of 8.57, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AMP has a P/S ratio of 1.72. This compares to its industry's average P/S of 2.52.

Finally, our model also underscores that AMP has a P/CF ratio of 10.47. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. AMP's current P/CF looks attractive when compared to its industry's average P/CF of 17.67. Over the past year, AMP's P/CF has been as high as 10.60 and as low as 6.94, with a median of 9.55.

These are just a handful of the figures considered in Ameriprise Financial Services's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AMP is an impressive value stock right now.


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Zacks Investment Research