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Ameriprise Financial Inc AMP

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Morningstar’s Analysis

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Increasing Our Fair Value Estimate for Ameriprise Financial to $236

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

We are increasing our fair value estimate for narrow-moat Ameriprise Financial to $236 from $208 per share, which implies around a 12.5 times P/E multiple of 2022 projected earnings and about 5 times tangible book value. Of the $28 increase in our fair value estimate, approximately $8 is from earnings since our previous valuation update, $24 is from higher client assets driven by inflows and recent market appreciation, and $11 is from increasing our assumed returns on capital in the later years of our valuation model. Offsetting this was a $14 reduction from increasing the tax rate that we use in our model, as we assume the United States will increase the corporate tax rate, and $1 of miscellaneous adjustments.

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Company Profile

Business Description

Spun off from American Express in 2005, Ameriprise Financial has emerged as a major player in the U.S. market for asset and wealth management, with around $1.1 trillion in total assets under management and advisement at the end of 2020. Ameriprise has one of the largest branded advisor networks in the industry, and about 80% of the company's revenue comes from its asset and wealth management segments. Ameriprise has reduced its exposure to insurance with the sale of its auto and home insurance business in 2019 and discontinuing the sale of its proprietary fixed annuities in 2020. Around 90% of the company's pretax earnings are from the United States.

1099 Ameriprise Financial Center
Minneapolis, MN, 55474
T +1 612 671-3131
Sector Financial Services
Industry Asset Management
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 12,300