Bloomberg News

Ameriprise May Gain; Principal has More Risk, Dally Says

September 28, 2011

(Updates shares in fourth paragraph.)

Sept. 28 (Bloomberg) -- Ameriprise Financial Inc. shares may gain in the next 60 days after the firm underperformed rivals including Principal Financial Group Inc., said Nigel Dally, an analyst at Morgan Stanley.

Ameriprise, the provider of financial-planning services, “has superior capital flexibility, lower portfolio risks, lower interest rate risks, yet is trading at a lower price-earnings multiple,” Dally said in a note today.

The firm dropped 24 percent on the New York Stock Exchange since the end of July through yesterday, compared with a 13 percent decline at Des Moines, Iowa-based Principal. Investors have bet that Federal Reserve action to stimulate the economy may limit returns by driving down long-term interest rates.

Principal’s price at yesterday’s close was about 8.6 times earnings, compared with a ratio of 8.2-to-1 at Minneapolis-based Ameriprise, according to data compiled by Bloomberg. Ameriprise slipped $1.35, or 3.3 percent, to $39.99 at 4 p.m. in composite trading. Principal dropped 94 cents, or 3.9 percent, to $23.01.

“We are very confident about our long-term growth strategy and, in addition, have delivered strong earnings,” said Susan Houser, a spokeswoman for Principal, the seller of life insurance and retirement products, in an e-mailed statement.

Net income at Principal for the first six months of this year jumped about 38 percent from the same period in 2010 to $470.8 million. Profit at Ameriprise climbed 16 percent to $550 million for first half of this year.

--Editors: Dan Kraut, Dan Reichl

To contact the reporter on this story: Maryellen Tighe in New York at Mtighe6@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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