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Why is a Beat Less Likely for Ameriprise (AMP) in Q2 Earnings?

Zacks Equity Research

Ameriprise Financial, Inc. AMP is scheduled to report second-quarter 2019 results on Jul 24, after the market closes. While its earnings for the to-be-reported quarter are expected to grow year over year, revenues are likely to decline.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from growth in assets under management (AUM) and assets under administration (AUA). However, lower revenues and rise in operating expenses were headwinds.

Ameriprise has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 3.3%.

Ameriprise Financial, Inc. Price and EPS Surprise
 

Ameriprise Financial, Inc. Price and EPS Surprise

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

However, activities of the company in the second quarter did not encourage analysts to revise earnings estimates upward. Thus, the Zacks Consensus Estimate for earnings of $4.00 for the to-be-reported quarter has remained unchanged over the past seven days. Nevertheless, the figure indicates 11.1% growth from the prior-year quarter’s reported number.

The consensus estimate for the company’s sales is pegged at $2.95 billion, which suggests nearly 7.8% decrease from the year-ago quarter’s reported figure.

Before we take a look at what our quantitative model predicts for the second quarter, let’s check the factors that are likely to influence results.

Factors to Influence Q2 Results

Ameriprise has been witnessing net outflows in the Asset Management segment over the past few years, which negatively impacted AUM and AUA to some extent. However, the Advice & Wealth Management segment is likely to record growth in assets in the second quarter, based on expectations of improved advisor productivity. Thus, total assets are likely to rise in the to-be-reported quarter.

Supported by expected increase in assets, the related fee is also likely to be positively impacted.

However, while the company’s initiatives to focus on cost management resulted in controlled general and administrative expenses, advertising campaign and technology upgrades will likely keep costs elevated.

Earnings Whispers

According to our quantitative model, chances of Ameriprise beating the Zacks Consensus Estimate in the second quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds 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 -2.00%.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Here are some finance stocks that you may want to consider as these have the right combination of elements to post an earnings beat this quarter, per our model.

T. Rowe Price Group, Inc. TROW has an Earnings ESP of +0.33% and sports a Zacks Rank #1 (Strong Buy) at present. The company is expected to release results on Jul 24.

Franklin Resources, Inc. BEN is slated to release results on Jul 30. It currently has an Earnings ESP of +0.13% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ares Capital Corporation ARCC is expected to release results on Jul 30. It presently has an Earnings ESP of +1.02% and a Zacks Rank #2 (Buy).

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