Ameriprise Financial (NYSE: AMP) and Northern Trust (NASDAQ:NTRS) are both large-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, analyst recommendations, profitability, dividends and valuation.

Analyst Recommendations

This is a summary of current recommendations and price targets for Ameriprise Financial and Northern Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameriprise Financial 0 4 3 0 2.43
Northern Trust 1 9 3 0 2.15

Ameriprise Financial currently has a consensus price target of $154.54, indicating a potential downside of 12.84%. Northern Trust has a consensus price target of $98.77, indicating a potential downside of 7.35%. Given Northern Trust’s higher probable upside, analysts plainly believe Northern Trust is more favorable than Ameriprise Financial.

Insider & Institutional Ownership

81.6% of Ameriprise Financial shares are owned by institutional investors. Comparatively, 81.7% of Northern Trust shares are owned by institutional investors. 1.5% of Ameriprise Financial shares are owned by company insiders. Comparatively, 1.3% of Northern Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Ameriprise Financial has a beta of 1.93, indicating that its share price is 93% more volatile than the S&P 500. Comparatively, Northern Trust has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.

Valuation & Earnings

This table compares Ameriprise Financial and Northern Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ameriprise Financial $11.70 billion 2.24 $1.31 billion $10.72 16.54
Northern Trust $5.14 billion 4.71 $1.03 billion $4.53 23.53

Ameriprise Financial has higher revenue and earnings than Northern Trust. Ameriprise Financial is trading at a lower price-to-earnings ratio than Northern Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Ameriprise Financial pays an annual dividend of $3.32 per share and has a dividend yield of 1.9%. Northern Trust pays an annual dividend of $1.68 per share and has a dividend yield of 1.6%. Ameriprise Financial pays out 31.0% of its earnings in the form of a dividend. Northern Trust pays out 37.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Northern Trust has raised its dividend for 8 consecutive years. Ameriprise Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Ameriprise Financial and Northern Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ameriprise Financial 14.24% 29.75% 1.31%
Northern Trust 20.27% 12.33% 0.89%

Summary

Ameriprise Financial beats Northern Trust on 10 of the 16 factors compared between the two stocks.

Ameriprise Financial Company Profile

Ameriprise Financial, Inc. is a financial services company that offers financial solutions to individual and institutional clients. The Company operates in five segments: Advice & Wealth Management; Asset Management; Annuities; Protection, and Corporate & Other. The Company uses Ameriprise Financial as its enterprise brand, as well as the name of its advisor network and certain of its retail products and services. The retail products and services that use the Ameriprise Financial brand include those that it provides through its advisors (financial planning, investment advisory accounts and retail brokerage services) and products and services that the Company markets directly to consumers or through affinity groups (personal auto and home insurance). The Company uses its RiverSource brand for its annuity and protection products issued by the RiverSource Life companies, including its life and disability income insurance products.

Northern Trust Company Profile

Northern Trust Corporation is a financial holding company. The Company provides asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families and individuals across the world. Its segments include Corporate & Institutional Services (C&IS), Wealth Management, and Treasury and Other. The C&IS segment is a provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds and other institutional investors around the globe. The Wealth Management segment provides trust, investment management, custody and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services, and private and business banking. It conducts its business through various subsidiaries.

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