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What's in the Cards for Ameriprise (AMP) in Q4 Earnings?

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Ameriprise Financial, Inc. AMP is scheduled to report fourth-quarter and 2020 results on Jan 27, after market close. While its revenues are anticipated to have witnessed a decline in the quarter on a year-over-year basis, earnings are projected to have improved.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. An improvement in assets under management (AUM) and assets under administration (AUA) balance supported results. However, a decline in revenues and higher expenses were the undermining factors.

Ameriprise does not have an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two and lagged in two of the trailing four quarters, the average beat being 9.3%.

Ameriprise Financial, Inc. Price and EPS Surprise

 

Ameriprise Financial, Inc. Price and EPS Surprise
Ameriprise Financial, Inc. Price and EPS Surprise

Ameriprise Financial, Inc. price-eps-surprise | Ameriprise Financial, Inc. Quote

Notably, the Zacks Consensus Estimate for the company’s fourth-quarter earnings is pegged at $4.44 per share, which indicates a rise of 5.7% from the prior-year quarter’s reported number. The estimate has been revised 2.3% upward over the past 30 days.

Before we take a look at what our quantitative model predicts, let’s check the factors that are likely to have influenced the company’s performance in the fourth quarter.

Estimates & Key Factors to Note

The Zacks Consensus Estimate for management and financial advice fees (constituting more than 60% of the company’s total net revenues) is pegged at $1.92 billion for the to-be-reported quarter, which suggests a rise of 1.5% from the prior quarter’s reported number.

Also, the consensus estimate for net investment income of $308 million suggests 2.7% growth from the previous quarter’s reported figure. The consensus estimate for premiums is pegged at $97 million, indicating a 21.3% sequential rise.

However, the consensus estimate for distribution fees of $395 million indicates a decline of 1.3% sequentially. Likewise, the consensus mark for other revenues of $332 million indicates a 2.4% sequential decline.

Thus, the Zacks Consensus Estimate for total sales is pegged at $3.05 billion, which indicates a 7.2% decline from the year-ago quarter’s reported figure.

Notably, the company’s Asset Management segment has been recording net outflows over the past several quarters, which has been negatively impacting asset growth. However, the Advice & Wealth Management (“AWM”) segment is likely to have recorded growth in assets in the fourth quarter, based on expectations of improved advisor productivity.

While Ameriprise’s initiatives to focus on cost management have resulted in controlled general and administration (G&A) expenses in the past, overall costs are anticipated to have been elevated in the fourth quarter due to costs related to technology upgrades.

Notably, management expects G&A expenses in the AWM segment to be down $125 million year over year in 2020.

Earnings Whispers

According to our quantitative model, chances of Ameriprise beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better, which is required to be confident of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Ameriprise has an Earnings ESP of +1.43%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Here are a few other finance stocks that you may want to consider, as according to our model, these too have the right combination of elements to post an earnings beat in their upcoming releases.

Invesco Ltd. IVZ is slated to release earnings figures on Jan 26. The company, which flaunts a Zacks Rank #1 (Strong Buy) at present, has an Earnings ESP of +1.70%.

The Earnings ESP for Waddell & Reed Financial, Inc. WDR is +5.11% and it sports a Zacks Rank #1, currently. The company is scheduled to report quarterly numbers on Feb 2.

Hilltop Holdings Inc. HTH is slated to release earnings figures on Jan 28. The company currently sports a Zacks Rank #1 and has an Earnings ESP of +9.80%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Waddell & Reed Financial, Inc. (WDR) : Free Stock Analysis Report
 
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