Critical Review: Affiliated Managers Group (AMG) and Ameriprise Financial Services (AMP)

Affiliated Managers Group (NYSE: AMG) and Ameriprise Financial Services (NYSE:AMP) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Valuation and Earnings

This table compares Affiliated Managers Group and Ameriprise Financial Services’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Affiliated Managers Group $2.21 billion 4.64 $842.60 million $9.02 20.31
Ameriprise Financial Services $12.00 billion 1.77 $2.90 billion $8.78 16.12

Ameriprise Financial Services has higher revenue and earnings than Affiliated Managers Group. Ameriprise Financial Services is trading at a lower price-to-earnings ratio than Affiliated Managers Group, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Affiliated Managers Group has a beta of 1.66, indicating that its stock price is 66% more volatile than the S&P 500. Comparatively, Ameriprise Financial Services has a beta of 1.86, indicating that its stock price is 86% more volatile than the S&P 500.

Insider and Institutional Ownership

96.2% of Affiliated Managers Group shares are held by institutional investors. Comparatively, 79.4% of Ameriprise Financial Services shares are held by institutional investors. 1.4% of Affiliated Managers Group shares are held by insiders. Comparatively, 1.5% of Ameriprise Financial Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Affiliated Managers Group and Ameriprise Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Affiliated Managers Group 22.99% 17.45% 8.75%
Ameriprise Financial Services 11.81% 26.54% 1.20%

Analyst Ratings

This is a summary of recent recommendations and price targets for Affiliated Managers Group and Ameriprise Financial Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Affiliated Managers Group 0 2 5 0 2.71
Ameriprise Financial Services 1 4 4 0 2.33

Affiliated Managers Group presently has a consensus price target of $196.86, indicating a potential upside of 7.48%. Ameriprise Financial Services has a consensus price target of $145.85, indicating a potential upside of 3.08%. Given Affiliated Managers Group’s stronger consensus rating and higher possible upside, equities analysts clearly believe Affiliated Managers Group is more favorable than Ameriprise Financial Services.

Dividends

Affiliated Managers Group pays an annual dividend of $0.80 per share and has a dividend yield of 0.4%. Ameriprise Financial Services pays an annual dividend of $3.32 per share and has a dividend yield of 2.3%. Affiliated Managers Group pays out 8.9% of its earnings in the form of a dividend. Ameriprise Financial Services pays out 37.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Affiliated Managers Group has increased its dividend for 7 consecutive years.

Summary

Affiliated Managers Group beats Ameriprise Financial Services on 11 of the 17 factors compared between the two stocks.

Affiliated Managers Group Company Profile

Affiliated Managers Group, Inc. is an asset management company with equity investments in boutique investment management firms. The Company operates in three segments, which represent its principal distribution channels: Institutional, Mutual Fund and High Net Worth. The equity method investments in the Institutional distribution channel are made in relationships with public and private client entities, including foundations, endowments, sovereign wealth funds and retirement plans for corporations and municipalities. The equity method investments in the Mutual Fund distribution channel are made in advisory or sub-advisory relationships with active return-oriented mutual funds, Undertakings for Collective Investment in Transferable Securities and other retail products. The equity method investments in the High Net Worth distribution channel are made in relationships with high net worth and ultra-high net worth individuals, families, trusts, foundations, endowments and retirement plans.

Ameriprise Financial Services Company Profile

Ameriprise Financial, Inc. is a financial services company that offers financial solutions to individual and institutional clients. The Company operates in five segments: Advice & Wealth Management; Asset Management; Annuities; Protection, and Corporate & Other. The Company uses Ameriprise Financial as its enterprise brand, as well as the name of its advisor network and certain of its retail products and services. The retail products and services that use the Ameriprise Financial brand include those that it provides through its advisors (financial planning, investment advisory accounts and retail brokerage services) and products and services that the Company markets directly to consumers or through affinity groups (personal auto and home insurance). The Company uses its RiverSource brand for its annuity and protection products issued by the RiverSource Life companies, including its life and disability income insurance products.

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