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It hasn't been the best quarter for Ameriprise Financial, Inc. (NYSE:AMP) shareholders, since the share price has fallen 16% in that time. In contrast, the return over three years has been impressive. The share price marched upwards over that time, and is now 140% higher than it was. So the recent fall in the share price should be viewed in that context. The thing to consider is whether the underlying business is doing well enough to support the current price.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
See our latest analysis for Ameriprise Financial
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over the last three years, Ameriprise Financial failed to grow earnings per share, which fell 8.5% (annualized).
So we doubt that the market is looking to EPS for its main judge of the company's value. Given this situation, it makes sense to look at other metrics too.
The modest 1.8% dividend yield is unlikely to be propping up the share price. It could be that the revenue growth of 6.8% per year is viewed as evidence that Ameriprise Financial is growing. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Ameriprise Financial is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Ameriprise Financial's TSR for the last 3 years was 154%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.