Ameriprise Financial (AMP)

Financial services company Ameriprise Financial (NYSE:AMP) announced better-than-expected revenue in Q3 CY2025, with sales up 12.6% year on year to $4.89 billion. Its non-GAAP profit of $9.92 per share was 1.6% above analysts’ consensus estimates.

Company Overview

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.

Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.

Ameriprise Financial competes with major wealth management firms like Morgan Stanley (NYSE:MS), Bank of America's Merrill Lynch (NYSE:BAC), and Raymond James Financial (NYSE:RJF). In asset management, its competitors include BlackRock (NYSE:BLK), T. Rowe Price (NASDAQ:TROW), and Invesco (NYSE:IVZ). For insurance and annuity products, it competes with Prudential Financial (NYSE:PRU) and Lincoln National (NYSE:LNC).

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Ameriprise Financial’s 8.9% annualized revenue growth over the last five years was decent. Its growth was slightly above the average financials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Ameriprise Financial’s annualized revenue growth of 9.2% over the last two years aligns with its five-year trend, suggesting its demand was stable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Ameriprise Financial reported year-on-year revenue growth of 12.6%, and its $4.89 billion of revenue exceeded Wall Street’s estimates by 7.3%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Custody Bank companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last four years, Ameriprise Financial’s pre-tax profit margin has fallen by 5.2 percentage points, going from 20.1% to 25.4%. It has also expanded by 1.8 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

Ameriprise Financial’s pre-tax profit margin came in at 24% this quarter. This result was 9.1 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Ameriprise Financial’s EPS grew at a spectacular 22.5% compounded annual growth rate over the last five years, higher than its 8.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Ameriprise Financial, its two-year annual EPS growth of 13.7% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Ameriprise Financial reported adjusted EPS of $9.92, up from $8.10 in the same quarter last year. This print beat analysts’ estimates by 1.6%. Over the next 12 months, Wall Street expects Ameriprise Financial’s full-year EPS of $37.89 to grow 8.1%.

The balance sheet drives profitability for financial firms since earnings flow from managing diverse assets and liabilities across multiple business lines. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential across their varied operations.

When analyzing this sector, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value and provides insight into the institution’s capital position across diverse operations. On the other hand, EPS is often distorted by the diverse nature of operations, mergers, and various accounting treatments across different business units. Book value provides clearer performance insights.

Ameriprise Financial’s TBVPS grew at a mediocre 6.3% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 35.6% annually over the last two years from $37.73 to $69.33 per share.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Ameriprise Financial has averaged an ROE of 59.6%, 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.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Ameriprise Financial currently has $3.28 billion of debt and $6.46 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.6×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

We enjoyed seeing Ameriprise Financial beat analysts’ revenue expectations this quarter. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $478 immediately following the results.

Updated: December 4, 2025 at 11:08 PM EST

Before making an investment decision, investors should account for Ameriprise Financial’s business fundamentals and valuation in addition to what happened in the latest quarter.

Ameriprise Financial is an amazing business ranking highly on our list. First of all, the company’s revenue growth was decent over the last five years. On top of that, its stellar ROE suggests it has been a well-run company historically, and its expanding pre-tax profit margin shows the business has become more efficient.

Ameriprise Financial’s P/E ratio based on the next 12 months is 11.4x. Scanning the financials space today, Ameriprise Financial’s fundamentals really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $532.40 on the company (compared to the current share price of $474.12), implying they see 12.3% upside in buying Ameriprise Financial in the short term.