Yahoo Finance Should You Be Concerned About Ameriprise Financial Inc’s (NYSE:AMP) Earnings Growth?
When Ameriprise Financial Inc (NYSE:AMP) released its most recent earnings update (30 September 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Ameriprise Financial performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see AMP has performed.
View our latest analysis for Ameriprise Financial
Did AMP’s recent performance beat its trend and industry?
AMP’s trailing twelve-month earnings (from 30 September 2018) of US$1.7b has increased by 1.9% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 2.2%, indicating the rate at which AMP is growing has slowed down. What could be happening here? Well, let’s examine what’s occurring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Ameriprise Financial has invested its equity funds well leading to a 31% return on equity (ROE), above the sensible minimum of 20%. However, its return on assets (ROA) of 1.9% is below the US Capital Markets industry of 3.7%, indicating Ameriprise Financial’s are utilized less efficiently. Though, its return on capital (ROC), which also accounts for Ameriprise Financial’s debt level, has increased over the past 3 years from 2.4% to 2.4%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 112% to 90% over the past 5 years.
What does this mean?
Though Ameriprise Financial’s past data is helpful, it is only one aspect of my investment thesis. While Ameriprise Financial has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Ameriprise Financial to get a better picture of the stock by looking at:
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.
Financial Health: Are AMP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
