Intrinsic value of Ameriprise Financial - AMP

Previous Close

$143.36

  Intrinsic Value

$223.26

stock screener

  Rating & Target

str. buy

+56%

  Value-price divergence*

-32%

Previous close

$143.36

 
Intrinsic value

$223.26

 
Up/down potential

+56%

 
Rating

str. buy

 
Value-price divergence*

-32%

Our model is not good at valuating stocks of financial companies, such as AMP.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AMP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 22.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -3.81
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  5.00
Revenue, $m
  11,735
  12,310
  12,914
  13,550
  14,217
  14,919
  15,656
  16,430
  17,244
  18,099
  18,997
  19,940
  20,931
  21,971
  23,064
  24,212
  25,418
  26,684
  28,014
  29,410
  30,877
  32,417
  34,034
  35,733
  37,516
  39,389
  41,356
  43,421
  45,589
  47,866
  50,257
Variable operating expenses, $m
 
  9,756
  10,230
  10,728
  11,251
  11,801
  12,378
  12,985
  13,623
  14,293
  14,996
  15,625
  16,401
  17,217
  18,073
  18,973
  19,917
  20,910
  21,952
  23,046
  24,195
  25,402
  26,669
  28,000
  29,397
  30,865
  32,406
  34,024
  35,723
  37,508
  39,381
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,902
  9,756
  10,230
  10,728
  11,251
  11,801
  12,378
  12,985
  13,623
  14,293
  14,996
  15,625
  16,401
  17,217
  18,073
  18,973
  19,917
  20,910
  21,952
  23,046
  24,195
  25,402
  26,669
  28,000
  29,397
  30,865
  32,406
  34,024
  35,723
  37,508
  39,381
Operating income, $m
  1,833
  2,554
  2,684
  2,822
  2,966
  3,118
  3,278
  3,445
  3,621
  3,806
  4,001
  4,315
  4,530
  4,755
  4,991
  5,240
  5,501
  5,775
  6,062
  6,365
  6,682
  7,015
  7,365
  7,733
  8,119
  8,524
  8,950
  9,397
  9,866
  10,359
  10,876
EBITDA, $m
  2,081
  2,701
  2,834
  2,973
  3,119
  3,273
  3,435
  3,605
  3,783
  3,971
  4,168
  4,375
  4,592
  4,821
  5,061
  5,312
  5,577
  5,855
  6,146
  6,453
  6,775
  7,113
  7,467
  7,840
  8,231
  8,642
  9,074
  9,527
  10,003
  10,502
  11,027
Interest expense (income), $m
  163
  457
  430
  654
  889
  1,137
  1,397
  1,670
  1,957
  2,258
  2,575
  2,908
  3,258
  3,625
  4,010
  4,415
  4,841
  5,288
  5,757
  6,250
  6,767
  7,311
  7,881
  8,481
  9,110
  9,771
  10,465
  11,194
  11,959
  12,763
  13,607
Earnings before tax, $m
  1,592
  2,097
  2,254
  2,168
  2,077
  1,981
  1,881
  1,775
  1,664
  1,548
  1,425
  1,407
  1,272
  1,130
  981
  824
  660
  487
  306
  115
  -85
  -295
  -516
  -748
  -991
  -1,247
  -1,515
  -1,797
  -2,093
  -2,404
  -2,731
Tax expense, $m
  278
  566
  609
  585
  561
  535
  508
  479
  449
  418
  385
  380
  343
  305
  265
  223
  178
  132
  83
  31
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  1,314
  1,531
  1,646
  1,583
  1,516
  1,446
  1,373
  1,296
  1,215
  1,130
  1,041
  1,027
  929
  825
  716
  602
  482
  356
  223
  84
  -85
  -295
  -516
  -748
  -991
  -1,247
  -1,515
  -1,797
  -2,093
  -2,404
  -2,731

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,486
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  139,821
  144,824
  151,935
  159,408
  167,262
  175,516
  184,188
  193,299
  202,872
  212,928
  223,492
  234,589
  246,245
  258,487
  271,346
  284,851
  299,035
  313,932
  329,576
  346,005
  363,259
  381,377
  400,404
  420,385
  441,367
  463,400
  486,537
  510,833
  536,345
  563,134
  591,264
Adjusted assets (=assets-cash), $m
  137,335
  144,824
  151,935
  159,408
  167,262
  175,516
  184,188
  193,299
  202,872
  212,928
  223,492
  234,589
  246,245
  258,487
  271,346
  284,851
  299,035
  313,932
  329,576
  346,005
  363,259
  381,377
  400,404
  420,385
  441,367
  463,400
  486,537
  510,833
  536,345
  563,134
  591,264
Revenue / Adjusted assets
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
  0.085
Average production assets, $m
  358
  369
  387
  406
  427
  448
  470
  493
  517
  543
  570
  598
  628
  659
  692
  726
  763
  801
  840
  882
  926
  973
  1,021
  1,072
  1,125
  1,182
  1,241
  1,303
  1,368
  1,436
  1,508
Working capital, $m
  0
  6,155
  6,457
  6,775
  7,109
  7,459
  7,828
  8,215
  8,622
  9,049
  9,498
  9,970
  10,465
  10,986
  11,532
  12,106
  12,709
  13,342
  14,007
  14,705
  15,438
  16,209
  17,017
  17,866
  18,758
  19,695
  20,678
  21,710
  22,795
  23,933
  25,129
Total debt, $m
  15,472
  12,284
  18,684
  25,410
  32,479
  39,907
  47,712
  55,913
  64,528
  73,578
  83,086
  93,073
  103,563
  114,582
  126,154
  138,309
  151,075
  164,481
  178,561
  193,348
  208,876
  225,183
  242,307
  260,290
  279,174
  299,003
  319,826
  341,692
  364,653
  388,763
  414,080
Total liabilities, $m
  133,529
  130,341
  136,741
  143,467
  150,536
  157,964
  165,769
  173,970
  182,585
  191,635
  201,143
  211,130
  221,620
  232,639
  244,211
  256,366
  269,132
  282,538
  296,618
  311,405
  326,933
  343,240
  360,364
  378,347
  397,231
  417,060
  437,883
  459,749
  482,710
  506,820
  532,137
Total equity, $m
  6,292
  14,482
  15,193
  15,941
  16,726
  17,552
  18,419
  19,330
  20,287
  21,293
  22,349
  23,459
  24,624
  25,849
  27,135
  28,485
  29,904
  31,393
  32,958
  34,601
  36,326
  38,138
  40,040
  42,039
  44,137
  46,340
  48,654
  51,083
  53,634
  56,313
  59,126
Total liabilities and equity, $m
  139,821
  144,823
  151,934
  159,408
  167,262
  175,516
  184,188
  193,300
  202,872
  212,928
  223,492
  234,589
  246,244
  258,488
  271,346
  284,851
  299,036
  313,931
  329,576
  346,006
  363,259
  381,378
  400,404
  420,386
  441,368
  463,400
  486,537
  510,832
  536,344
  563,133
  591,263
Debt-to-equity ratio
  2.459
  0.850
  1.230
  1.590
  1.940
  2.270
  2.590
  2.890
  3.180
  3.460
  3.720
  3.970
  4.210
  4.430
  4.650
  4.860
  5.050
  5.240
  5.420
  5.590
  5.750
  5.900
  6.050
  6.190
  6.330
  6.450
  6.570
  6.690
  6.800
  6.900
  7.000
Adjusted equity ratio
  0.046
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,314
  1,531
  1,646
  1,583
  1,516
  1,446
  1,373
  1,296
  1,215
  1,130
  1,041
  1,027
  929
  825
  716
  602
  482
  356
  223
  84
  -85
  -295
  -516
  -748
  -991
  -1,247
  -1,515
  -1,797
  -2,093
  -2,404
  -2,731
Depreciation, amort., depletion, $m
  248
  147
  149
  151
  153
  155
  157
  160
  162
  165
  167
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
  97
  102
  107
  113
  118
  124
  130
  137
  144
  151
Funds from operations, $m
  2,282
  1,678
  1,795
  1,734
  1,669
  1,602
  1,530
  1,456
  1,377
  1,295
  1,208
  1,087
  991
  891
  785
  674
  558
  436
  307
  172
  7
  -198
  -414
  -641
  -879
  -1,129
  -1,391
  -1,667
  -1,957
  -2,261
  -2,580
Change in working capital, $m
  311
  288
  302
  318
  334
  351
  369
  387
  407
  427
  449
  472
  495
  520
  546
  574
  603
  633
  665
  698
  733
  770
  809
  849
  892
  936
  983
  1,033
  1,084
  1,139
  1,196
Cash from operations, $m
  1,971
  1,391
  1,493
  1,416
  1,335
  1,251
  1,162
  1,068
  970
  867
  759
  615
  496
  371
  239
  100
  -45
  -197
  -358
  -526
  -726
  -968
  -1,223
  -1,490
  -1,771
  -2,065
  -2,375
  -2,700
  -3,041
  -3,399
  -3,775
Maintenance CAPEX, $m
  0
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -107
  -113
  -118
  -124
  -130
  -137
  -144
New CAPEX, $m
  -92
  -12
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
Cash from investing activities, $m
  -804
  -48
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -78
  -81
  -85
  -90
  -94
  -99
  -103
  -109
  -114
  -120
  -126
  -132
  -139
  -146
  -153
  -161
  -169
  -177
  -186
  -195
  -205
  -216
Free cash flow, $m
  1,167
  1,343
  1,438
  1,358
  1,275
  1,187
  1,095
  998
  897
  790
  678
  530
  406
  277
  140
  -3
  -154
  -312
  -478
  -652
  -858
  -1,107
  -1,368
  -1,643
  -1,931
  -2,234
  -2,552
  -2,886
  -3,236
  -3,604
  -3,991
Issuance/(repayment) of debt, $m
  816
  -764
  6,400
  6,726
  7,069
  7,428
  7,805
  8,200
  8,615
  9,051
  9,508
  9,987
  10,490
  11,018
  11,573
  12,155
  12,766
  13,407
  14,080
  14,786
  15,528
  16,307
  17,124
  17,983
  18,884
  19,830
  20,823
  21,866
  22,961
  24,110
  25,317
Issuance/(repurchase) of shares, $m
  -1,698
  6,660
  0
  0
  0
  0
  0
  0
  0
  0
  16
  82
  237
  399
  570
  749
  937
  1,134
  1,341
  1,559
  1,810
  2,107
  2,419
  2,746
  3,090
  3,450
  3,829
  4,227
  4,645
  5,083
  5,544
Cash from financing (excl. dividends), $m  
  -652
  5,896
  6,400
  6,726
  7,069
  7,428
  7,805
  8,200
  8,615
  9,051
  9,524
  10,069
  10,727
  11,417
  12,143
  12,904
  13,703
  14,541
  15,421
  16,345
  17,338
  18,414
  19,543
  20,729
  21,974
  23,280
  24,652
  26,093
  27,606
  29,193
  30,861
Total cash flow (excl. dividends), $m
  440
  7,239
  7,837
  8,084
  8,344
  8,615
  8,900
  9,199
  9,512
  9,841
  10,201
  10,600
  11,134
  11,694
  12,283
  12,900
  13,549
  14,229
  14,943
  15,693
  16,481
  17,307
  18,175
  19,086
  20,042
  21,046
  22,100
  23,207
  24,369
  25,589
  26,870
Retained Cash Flow (-), $m
  925
  -8,190
  -711
  -747
  -785
  -825
  -867
  -911
  -957
  -1,006
  -1,056
  -1,110
  -1,166
  -1,224
  -1,286
  -1,351
  -1,418
  -1,490
  -1,564
  -1,643
  -1,810
  -2,107
  -2,419
  -2,746
  -3,090
  -3,450
  -3,829
  -4,227
  -4,645
  -5,083
  -5,544
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -951
  7,126
  7,337
  7,558
  7,790
  8,033
  8,287
  8,555
  8,835
  9,145
  9,490
  9,968
  10,470
  10,997
  11,550
  12,130
  12,739
  13,379
  14,050
  14,670
  15,200
  15,756
  16,340
  16,953
  17,596
  18,271
  18,980
  19,725
  20,506
  21,326
Discount rate, %
 
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
 
  -869
  5,892
  5,442
  4,979
  4,511
  4,043
  3,582
  3,135
  2,709
  2,313
  1,949
  1,637
  1,351
  1,095
  871
  678
  517
  386
  281
  198
  135
  90
  58
  36
  22
  13
  7
  4
  2
  1
Current shareholders' claim on cash, %
  100
  76.9
  76.9
  76.9
  76.9
  76.9
  76.9
  76.9
  76.9
  76.9
  76.9
  76.8
  76.6
  76.2
  75.7
  75.2
  74.5
  73.7
  72.8
  71.8
  70.8
  69.6
  68.4
  67.1
  65.7
  64.3
  62.8
  61.3
  59.8
  58.2
  56.6

Ameriprise Financial, Inc., through its subsidiaries, provides various financial products and services to individual and institutional clients in the United States and internationally. The company’s Advice & Wealth Management segment provides financial planning and advice, as well as full-service brokerage services primarily to retail clients through its advisors. Its Asset Management segment offers investment management and advice, and investment products to retail, high net worth, and institutional clients through unaffiliated third party financial institutions and institutional sales force. This segment’s products include U.S. mutual funds and their non-U.S. equivalents, exchange-traded funds, variable product funds underlying insurance, and annuity separate accounts; and institutional asset management products, such as traditional asset classes, separately managed accounts, individually managed accounts, collateralized loan obligations, hedge funds, collective funds, and property funds. The company’s Annuities segment provides variable and fixed annuity products to individual clients through affiliated and unaffiliated advisors, and financial institutions. Its Protection segment offers various products to address the protection and risk management needs of retail clients, including life, disability income, and property casualty insurance through advisors and affinity relationships. The company was formerly known as American Express Financial Corporation and changed its name to Ameriprise Financial, Inc. in September 2005. Ameriprise Financial, Inc. was founded in 1894 and is headquartered in Minneapolis, Minnesota.

FINANCIAL RATIOS  of  Ameriprise Financial (AMP)

Valuation Ratios
P/E Ratio 16.9
Price to Sales 1.9
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 11.3
Price to Free Cash Flow 11.8
Growth Rates
Sales Growth Rate -3.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -30.8%
Cap. Spend. - 3 Yr. Gr. Rate -2.6%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 83.2%
Total Debt to Equity 245.9%
Interest Coverage 11
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 1.1%
Return On Total Capital 5.5%
Ret/ On T. Cap. - 3 Yr. Avg. 6%
Return On Equity 19.5%
Return On Equity - 3 Yr. Avg. 19.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 44.5%
Gross Margin - 3 Yr. Avg. 48.3%
EBITDA Margin 17.1%
EBITDA Margin - 3 Yr. Avg. 20.8%
Operating Margin 15.6%
Oper. Margin - 3 Yr. Avg. 19.9%
Pre-Tax Margin 13.6%
Pre-Tax Margin - 3 Yr. Avg. 17.3%
Net Profit Margin 11.2%
Net Profit Margin - 3 Yr. Avg. 12.4%
Effective Tax Rate 17.5%
Eff/ Tax Rate - 3 Yr. Avg. 20%
Payout Ratio 36.5%

AMP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMP stock intrinsic value calculation we used $11735 million for the last fiscal year's total revenue generated by Ameriprise Financial. The default revenue input number comes from 2016 income statement of Ameriprise Financial. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AMP stock valuation model: a) initial revenue growth rate of 4.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.5%, whose default value for AMP is calculated based on our internal credit rating of Ameriprise Financial, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Ameriprise Financial.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AMP stock the variable cost ratio is equal to 79.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AMP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Ameriprise Financial.

Corporate tax rate of 27% is the nominal tax rate for Ameriprise Financial. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AMP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AMP are equal to 3%.

Life of production assets of 10 years is the average useful life of capital assets used in Ameriprise Financial operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AMP is equal to 50%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6292 million for Ameriprise Financial - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 154.528 million for Ameriprise Financial is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Ameriprise Financial at the current share price and the inputted number of shares is $22.2 billion.

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COMPANY NEWS

▶ Investing in Asset Managers   [Aug-09-17 12:59PM  Forbes]
▶ Insights into Blackstones Dividend Distribution   [Jul-28-17 10:36AM  Market Realist]
▶ Ameriprise Loses 12b-1 Fees But Boosts Productivity   [Jul-27-17 02:19PM  Barrons.com]
▶ Ameriprise beats 2Q profit forecasts   [Jul-25-17 09:21PM  Associated Press]
▶ Behind Analysts Positive Ratings   [Jul-10-17 10:37AM  Market Realist]
▶ This is what siblings argue about when it comes to money   [Jun-21-17 12:14PM  MarketWatch]
▶ Financial sector up over 5%   [Jun-20-17 09:32AM  CNBC Videos]
▶ Janus-Henderson Merger: The Wait Is Over   [Jun-13-17 04:56PM  Market Realist]
▶ Does the Nasdaq rally have legs?   [Apr-25-17 07:17PM  CNBC Videos]
▶ Ameriprise beats 1Q profit forecasts   [Apr-24-17 05:06PM  Associated Press]
▶ Local investment firm acquired by its competitor Ameriprise Financial   [04:01PM  American City Business Journals]
▶ Top 7 Financial Stocks to Own for 2017   [Apr-21-17 12:45PM  TheStreet.com]
▶ Here's how you should spend your tax refund   [Apr-14-17 11:37AM  Fox Business Videos]
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▶ Expecting a Big Inheritance? Don't Count on It!   [Mar-21-17 06:00AM  at Investopedia]
▶ Tips to Secure Your Family's Financial Future   [Mar-16-17 02:34PM  MarketWatch]
▶ Tips to Secure Your Family's Financial Future   [02:34PM  at MarketWatch]
▶ List Leaders: Largest wealth management firms in the metro   [Feb-03-17 11:25AM  at bizjournals.com]
Stock chart of AMP Financial statements of AMP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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