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Why Ameriprise Financial Jumped 14% in October

By Dave Kovaleski – Nov 4, 2021 at 4:32PM

Key Points

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The wealth manager had a record third quarter.

What Happened

Ameriprise Financial (AMP 0.86%) had an excellent month of October, as its stock price rose 14.4%, according to S&P Global Market Intelligence

The financial planning and wealth management firm beat the S&P 500, which was up 6.9%. As of Nov. 4, Ameriprise was trading at about $305 per share and is up roughly 57% year to date.

Two people looking at a computer screen.

Image source: Getty Images.

So what

Ameriprise Financial operates in three different businesses -- financial advice and wealth management, asset management, and retirement solutions, with advice and wealth management (AWM) accounting for about 60% of its revenue.

The stock price surged at the end of the month after Ameriprise reported strong third-quarter earnings. The company posted record revenue, earnings, and client assets. It had $3.5 billion in adjusted operating net revenue, up 18% year over year; $1 billion of net income, or $8.65 per share, up 59% from the year-ago period; and $811 billion in client assets in its AWM business, up 22% year over year.

The gains were across the board, as AWM revenue jumped 22%, asset management climbed 24%, and retirement solutions increased 7%. The company had $10 billion in inflows into its AWM business, up 64% year over year, and about $4 billion in inflows into asset management, up from net outflows a year ago. Also, it increased its return on equity to 41.7%.

Ameriprise also brought in two independent advisors into its network in the month, Reid Evans and Christensen Wealth Advisory Group, and was named the most trusted wealth advisor by Investorʻs Business Daily.

Now what

Ameriprise is having a strong year, and investments it has made in training and development of its advisor network is paying off, as Chairman and CEO James Cracchiolo said on the third-quarter earnings call.

"Our advisors are benefiting from our training, coaching, and suite of tools to build and deepen client relationships, track prospects, and run and grow their practices through our fully integrated platform," Cracchiolo said. "This positive momentum and engagement are leading to robust client activity, asset flows, and client acquisition."

Looking ahead, Ameriprise expects to close on its acquisition of BMOʻs asset management business in Europe, the Middle East and Africa in the fourth quarter. The acquisition will bring about $124 billion in assets, primarily European institutional, to Ameriprise and expand its global presence while complementing its asset manager, Columbia Threadneedle.

Beyond that, inflation, gross domestic product growth, and stock market volatility are all concerns that could impact growth. But it's relatively cheap with a forward price-to-earnings ratio of 12.7 and a price-to-earnings-to-growth ratio of 0.96. 

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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