AMERIPRISE FINANCIAL INC. $45 (New York symbol AMP; WSSF Rating: Average) provides wealth management, brokerage and insurance services through a nationwide network of over 12,000 advisors. It currently owns, manages or administers assets worth $428.1 billion.
In the three months ended December 31, 2005, Ameriprise’s income from continuing operations fell 52.2%, to $0.44 a share (total $111 million) from $0.92 a share ($226 million) a year earlier. If you disregard costs related to the separation from American Express and other one-time items, per-share profits fell 6.1%, to $0.77 from $0.82. Revenue crept up to $1.87 billion from $1.84 billion. However, excluding discontinued operations, revenue grew 5%.
The company prefers to focus on wealthier individuals to whom it can market a variety of financial products. In the most recent quarter, 44% of the company’s clients paid fees to subscribe to an Ameriprise financial management plan, up from 42% a year earlier. These long-term plans give Ameriprise steadier revenue streams than one-time sales of insurance or other financial products.
Ameriprise also aims to spur demand for its RiverSource family of mutual funds. These funds have performed poorly over the past few years, and sales have suffered. A recent $15 million fine for improper trading also hurt RiverSource’s reputation. Ameriprise hopes that a recent restructuring will improve this division’s performance. It may also start selling these funds through independent brokers, instead of relying on its own salespeople.
Although Ameriprise plans to spend more on new computers and marketing in 2006, earnings will probably rise to $3.10 a share and the stock trades at 14.5 times that figure. The $0.44 dividend yields 1.0%.
Ameriprise is a hold.