Ameriprise Financial has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 14.8% to $557.69 per share while the index has gained 11.7%.
Is now a good time to buy AMP? Find out in our full research report, it’s free.
Why Is Ameriprise Financial a Good Business?
Founded in 1894 and spun off from American Express in 2005, Ameriprise Financial (NYSE:AMP) provides financial planning, wealth management, asset management, and insurance products to help individuals and institutions achieve their financial goals.
1. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Ameriprise Financial’s EPS grew at 20.8% compounded annual growth rate over the last five years, higher than its 8.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
2. Growing TBVPS Reflects Strong Asset Base
We consider tangible book value per share (TBVPS) an important metric for financial firms. TBVPS represents the real, liquid net worth per share of a company, excluding intangible assets that have debatable value upon liquidation.
Ameriprise Financial’s TBVPS increased by 7.7% annually over the last five years, and growth has recently accelerated as TBVPS grew at an exceptional 19.1% annual clip over the past two years (from $50.72 to $71.97 per share).
3. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of financial firm funding. Financial firms maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.
Over the last five years, Ameriprise Financial has averaged an ROE of 65.2%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Ameriprise Financial has a strong competitive moat.
Final Judgment
These are just a few reasons why we think Ameriprise Financial is a great business. At $557.69 per share (or 11.3× forward P/E), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.
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