Ameriprise Financial (NYSE: AMP) and Arlington Asset Investment Corp (NYSE:AI) are both financials companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, earnings, dividends, institutional ownership, profitability, analyst recommendations and risk.

Institutional and Insider Ownership

79.4% of Ameriprise Financial shares are held by institutional investors. Comparatively, 38.6% of Arlington Asset Investment Corp shares are held by institutional investors. 1.5% of Ameriprise Financial shares are held by company insiders. Comparatively, 5.9% of Arlington Asset Investment Corp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Ameriprise Financial pays an annual dividend of $3.32 per share and has a dividend yield of 2.2%. Arlington Asset Investment Corp pays an annual dividend of $2.20 per share and has a dividend yield of 17.2%. Ameriprise Financial pays out 37.8% of its earnings in the form of a dividend. Arlington Asset Investment Corp pays out -146.7% 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. Ameriprise Financial has raised its dividend for 7 consecutive years. Arlington Asset Investment Corp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Ameriprise Financial and Arlington Asset Investment Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ameriprise Financial 13.11% 25.27% 1.11%
Arlington Asset Investment Corp -33.84% -10.44% -0.93%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Ameriprise Financial and Arlington Asset Investment Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameriprise Financial 0 4 4 0 2.50
Arlington Asset Investment Corp 0 2 2 0 2.50

Ameriprise Financial presently has a consensus price target of $147.10, indicating a potential downside of 4.55%. Arlington Asset Investment Corp has a consensus price target of $14.94, indicating a potential upside of 17.07%. Given Arlington Asset Investment Corp’s higher possible upside, analysts plainly believe Arlington Asset Investment Corp is more favorable than Ameriprise Financial.

Risk & Volatility

Ameriprise Financial has a beta of 1.88, meaning that its stock price is 88% more volatile than the S&P 500. Comparatively, Arlington Asset Investment Corp has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500.

Valuation & Earnings

This table compares Ameriprise Financial and Arlington Asset Investment Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ameriprise Financial $12.00 billion 1.93 $2.90 billion $8.78 17.55
Arlington Asset Investment Corp $45.40 million 7.29 -$38.93 million ($1.50) -8.51

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

Summary

Ameriprise Financial beats Arlington Asset Investment Corp on 10 of the 15 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.

Arlington Asset Investment Corp Company Profile

Arlington Asset Investment Corp. is an investment company. The Company focuses on acquiring and holding a levered portfolio of residential mortgage-backed securities (MBS), consisting of agency MBS and private-label MBS. Agency MBS include residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a United States Government agency or government-sponsored enterprise (GSE), such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Private-label MBS, or non-agency MBS, include residential MBS that are not guaranteed by a GSE or the United States Government. The Company funds its investments primarily through short-term financing arrangements. The Company purchases agency MBS either in initial offerings or in the secondary market through broker-dealers or similar entities. It may invest in agency MBS collateralized by adjustable-rate mortgage loans (ARMs) or hybrid ARMs.

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