Can Ameriprise (AMP) Keep the Earnings Streak Alive? - Analyst Blog

Ameriprise Financial, Inc. AMP is scheduled to release first-quarter 2014 results Monday, Apr 28, after market close.

In the last quarter, Ameriprise delivered a 2.8% positive earnings surprise on the back of higher revenues and strong assets under management (AUM) growth. Moreover, the company reported earnings beats in all four quarters of 2013, with an average surprise of 4.7%.

Can Ameriprise maintain its earnings streak this quarter? Or will it disappoint? Let us see how things are shaping up for this announcement.

Factors to Impact Q1 Results

The overall market scenario remained sluggish and the interest rate environment did not reverse in the quarter. Nevertheless, as Ameriprise mainly deals with asset management and advisory business, the low rate environment should not have any significant impact on the company's top-line growth. It derives more than 60% of its revenues (as of 2013) from fees.

Further, the overall equity market remained strong, though the pace of improvement somewhat slackened this quarter. So re-engagement of retail clients is likely to lose pace this quarter, but strong AUM pipeline as well as continued rise in demand for advisory services should more than offset the negatives.

On the other hand, the company's aggressive marketing strategy will continue to keep distribution expenses high. Further, Ameriprise continues to recruit experienced advisors that will expectedly increase compensation expenses. So we don't expect the rising expense trend to reverse this quarter.

Ameriprise failed to impress analysts with its level of activities during the quarter. The Zacks Consensus Estimate for the quarter remained unchanged at $1.87 per share over the last 7 days.

Earnings Whispers

Our proven model does not conclusively show that Ameriprise is likely to beat the Zacks Consensus Estimate in the first quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen. Unfortunately, this is not the case here as you can see below.

Zacks ESP:  The Earnings ESP for Ameriprise is -1.07%. This is because the Most Accurate estimate stands at $1.85 while the Zacks Consensus Estimate is higher, at $1.87.
 
Zacks Rank: Ameriprise's Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call.  

Stocks That Warrant a Look

Here are a few asset managers that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

AllianceBernstein Holding L.P. AB has an earnings ESP of +2.44% and carries a Zacks Rank #3. It is scheduled to report results on Apr 30.

Legg Mason, Inc. LM has an earnings ESP of +1.12% and carries a Zacks Rank #3. It is scheduled to report fiscal fourth-quarter and full-year 2014 results on May 1.

The earnings ESP for Lazard Ltd. LAZ is +1.82% and it carries a Zacks Rank #1 (Strong Buy). It is scheduled to report results on May 1.