The annual results for Ameriprise Financial, Inc. (NYSE:AMP) were released last week, making it a good time to revisit its performance. Results overall were respectable, with statutory earnings of US$13.96 per share roughly in line with what analysts had forecast. Revenues of US$13b came in 5.5% ahead of analyst predictions. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus, from the seven analysts covering Ameriprise Financial, is for revenues of US$12.6b in 2020, which would reflect a measurable 2.5% reduction in Ameriprise Financial’s sales over the past 12 months. Statutory earnings per share are expected to soar 24% to US$17.53. Before this earnings report, analysts had been forecasting revenues of US$12.6b and earnings per share (EPS) of US$16.37 in 2020. So the consensus seems to have become somewhat more optimistic on Ameriprise Financial’s earnings potential following these results.
There’s been no major changes to the consensus price target of US$188, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. Currently, the most bullish analyst values Ameriprise Financial at US$202 per share, while the most bearish prices it at US$177. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.5% a significant reduction from annual growth of 1.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 5.1% annually for the foreseeable future. It’s pretty clear that Ameriprise Financial’s revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ameriprise Financial following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Ameriprise Financial’s revenues are expected to perform worse than the wider market. The consensus price target held steady at US$188, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for Ameriprise Financial going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Ameriprise Financial’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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