U.S. Markets close in 2 hrs 19 mins

Why Ameriprise Financial, Inc. (NYSE:AMP) Is An Attractive Investment To Consider

Simply Wall St

Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!

As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Ameriprise Financial, Inc. (NYSE:AMP), it is a financially-sound company with a a great track record of performance, trading at a great value. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Ameriprise Financial here.

Outstanding track record, undervalued and pays a dividend

AMP delivered a bottom-line expansion of 42% in the prior year, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 38% return to shareholders, which is what investors like to see! AMP's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that AMP manages its cash and cost levels well, which is a key determinant of the company’s health. AMP seems to have put its debt to good use, generating operating cash levels of 0.5x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.

NYSE:AMP Income Statement, April 3rd 2019

AMP's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of AMP's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the capital markets industry, AMP is also trading below its peers, relative to earnings generated. This supports the theory that AMP is potentially underpriced.

NYSE:AMP Intrinsic value, April 3rd 2019

Next Steps:

For Ameriprise Financial, I've compiled three relevant factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for AMP’s future growth? Take a look at our free research report of analyst consensus for AMP’s outlook.
  2. Dividend Income vs Capital Gains: Does AMP return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from AMP as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AMP? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.