Ameriprise Financial Easing Baby Boomers into Retirement

One of the largest spin-offs in U.S. history is Ameriprise Financial Inc. (AMP). AMP provides financial planning, asset management and insurance to individuals as well as businesses and organizations. The company offers asset management products and services in the U.S. through subsidiary company RiverSource Investments and in Europe through Threadneedle Asset Management Limited.

AMP is best known, however, for its certified financial planners and its Retirement Services branch, who provide investment management and recordkeeping services for company 401(k) plans. The company originally spun off from American Express Company (AXP) on September 30, 2005.

Founded in 1894 under the name Investors Syndicate, the company is based in Minneapolis, Minnesota and has experienced great growth, with the largest number of certified financial planners among retail advisory forces and the largest number of financial planning clients. The financial advisor network offers asset accumulation, and income management products and services to retail clients. That business is also concentrated on mutual funds and annuities.

The other aspect of AMP, offered through the financial advisor network, is the Protection segment. This is the insurance products and services business and includes life insurance, disability income and brokerage insurance products.

Building up the Brand
Even though the company spun-off from its parent just over a year ago, more than 110 years of experience have brought it valuable expertise and a market cap of $13.19 billion. In the past year, the company has also adapted very well to its new name. Building up its brand equity through focused media commercials and a huge on-line presence, Ameriprise is becoming somewhat of a household name among baby boomers, synonymous with personalized financial advice through a long-term relationship.

This is a business plan that is proving itself worth sticking to, as the baby boomer generation enters retirement. Relationships built through their 401(k) advisement can prove to continue expanding the company.

Evidence of the strength of the AMP business model has been reflected only moderately in its fundamentals, as it has a track record of only one year. This was a year that involved payments to American Express Company [AXP] through the sale of subsidiary AMEX Assurance Company, as well as AMP's 50% ownership in American Express International Deposit Company.

The company managed to attain on its own year over year quarterly most recent revenue growth of 5.60%, compared to an industry average of 8.50%, and a 5.23% revenue growth over the previous twelve months. Its trailing twelve month operating margins of 28.59% are competitive, just behind the industry average of 30.32%.

Our computer-driven algorithms calculate that the stock is likely to continue growing, as it currently trades at a reasonable price. AMP has a price to earning (P/E) ratio of 23.80 on par to the industry average of 24.91, after a strong six month price increase. Still today, its price to book (P/B) value of 1.70 is well below the company's peer group average of 4.20. Based on all of this data, the fact that 10 big name analysts are following the firm, and even with the payments and transactions this first year with American Express, we calculate AMP to be an interesting spin-off; one that can very well achieve benchmark beating returns. Its earnings conference call is after the market closes 1/25/07; stay tuned.

Disclosure: Ameriprise Financial Inc. [AMP] is a constituent in the Clear Spin-Off index licensed for the Claymore/Clear Spin-Off ETF (AMEX:(CSD)). Mr. Corn is CEO and founder of Clear Indexes LLC which publishes the index and he owns shares of the ETF CSD. He does not directly own shares in [AMP].

AMP 1-yr chart