Ameriprise Misses on Lower Top Line - Analyst Blog
February 02 2012 - 5:15AM
Zacks
Ameriprise Financial
Inc.(AMP) reported fourth-quarter 2011 operating earnings
of $1.33 per share significantly below the Zacks Consensus Estimate
of $1.39. However, this compares favorably with the year-ago
quarter’s earnings of $1.31 per share.
Operating results exclude net
realized gains or losses, integration charges, market impact on
variable annuity guaranteed living benefits and discontinued
operations.
For the reported quarter, net
income attributable to Ameriprise came in at $253 million or $1.08
per share compared with $280 million or $1.06 per share in the
comparable quarter last year.
Quarterly results were impacted by
lower net revenues and slower growth in almost all its segments.
However, lower operating expenses and an increase in asset under
management were the positives.
For the full year, Ameriprise
recorded earnings of $5.00 per share compared with $4.53 in 2010.
The earnings missed the Zacks Consensus Estimate of $5.07.
Quarterly
Details
On an operating basis, Ameriprise’s
net revenues for the fourth quarter fell 2% year over year to $2.46
billion. The decline mainly reflects lower hedge fund performance
fees, continued low interest rate environment and market
volatility, partially mitigated by a rise in asset-based fees. Net
revenues also stood below the Zacks Consensus Estimate of $2.49
billion.
For the fiscal 2011, Ameriprise’s
net revenues on operating basis stood at $10.05 billion, up 10%
from $9.12 billion in 2010. However, net revenues were below the
Zacks Consensus Estimate of $10.50 billion.
GAAP expenses in the quarter inched
up 1.8% year over year to $2.23 billion, while operating expenses
fell 1.4% from the year-ago quarter to $2.07 billion. The decline
represents lower benefits, claims, losses and settlement costs,
general and administrative expenses, and interest and debt
expenses. These were partially mitigated by increase in
distribution expenses.
Asset Position
Total assets under management and
administration surged 5% sequentially to $631 billion as of
December 31, 2011, driven by net inflows in Asset Management
segment and market appreciation.
Capital Deployment
Activities
During the fourth quarter,
Ameriprise repurchased 5.5 million shares of its common stock for
$248 million. Moreover in December 2011, the company announced 22%
hike in its quarterly cash dividend to 28 cents per share. Overall,
during 2011, Ameriprise returned $1.7 billion to its shareholders
in the form of share repurchases and dividends.
Peer
Performance
BlackRock Inc.’s
(BLK) fourth-quarter adjusted earnings surpassed the Zacks
Consensus Estimate, primarily aided by lower operating expenses,
which was partially offset by weak revenue.
Our Viewpoint
Though there is concern over the
sluggish market recovery, improvement in retail client activity as
well as decent growth in Advice & Wealth Management and Asset
Management businesses would drive operating leverage in the
upcoming quarters.
Furthermore, Ameriprise’s capital
deployment activity would also boost investors’ confidence in the
stock. Moreover, following the sale of Securities America, the
company will be able to concentrate more on its core and profitable
operations.
Ameriprise currently retains a
Zacks # 3 Rank, which translates into a short-term ‘Hold’ rating.
Also, considering the fundamentals, we maintain our long-term
“Neutral” recommendation on the stock.
AMERIPRISE FINL (AMP): Free Stock Analysis Report
BLACKROCK INC (BLK): Free Stock Analysis Report
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