After looking at Ameriprise Financial, Inc.’s (NYSE:AMP) latest earnings update (30 June 2019), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.
Did AMP beat its long-term earnings growth trend and its industry?
AMP’s trailing twelve-month earnings (from 30 June 2019) of US$1.9b has jumped 11% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.5%, indicating the rate at which AMP is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is only because of industry tailwinds, or if Ameriprise Financial has seen some company-specific growth.
In terms of returns from investment, Ameriprise Financial has invested its equity funds well leading to a 32% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 2.0% exceeds the US Capital Markets industry of 1.2%, indicating Ameriprise Financial has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Ameriprise Financial’s debt level, has increased over the past 3 years from 2.1% to 2.4%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 111% to 89% over the past 5 years.
What does this mean?
Ameriprise Financial’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Ameriprise Financial gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you 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 June 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.