Ameriprise Financial, Inc.AMPNYSE

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $858.25 per share(market-calibrated)

+82.2%

Upside to Fair Value

Current

$471.08

Pure Model

$879.62

Fair Value

$858.25

Bull Case

$1,038.70

Bear Case

$728.29

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $879.62.

What's Driving This Ratingfor AMP

✓

CapEx already efficient

CapEx at 0.86% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 34.12% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 2.88% revenue growth, fading to 2.50% by Year 10. Revenue reaches $26.2B (vs $18.9B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 75.85% indicates efficient cash generation. FCF reaches $6.8B by Year 10 (25.84% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.25

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.13%

Cost of Debt

Pre-tax Cost of Debt4.66%

Tax Rate20.89%

After-tax Cost of Debt3.69%

Equity Weight (E/V)88.40%

Debt Weight (D/V)11.60%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (88.40% × 10.13%) + (11.60% × 3.69%)

= 9.38%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$19.4B	$21.3B	$23.2B	$24.3B	$26.2B
EBIT	$6.6B	$7.3B	$7.9B	$8.3B	$8.9B
Tax	$1.4B	$1.5B	$1.7B	$1.7B	$1.9B
NOPAT	$5.2B	$5.7B	$6.2B	$6.6B	$7.1B
+ Depreciation	-$10M	-$11M	-$12M	-$12M	-$13M
- Capex	$166M	$182M	$198M	$208M	$224M
- Δ NWC	$54M	$95M	$56M	$59M	$64M
Free Cash Flow	$5.0B	$5.5B	$6.0B	$6.3B	$6.8B
Discount Factor	0.914	0.764	0.639	0.534	0.408
Present Value	$4.6B	$4.2B	$3.8B	$3.4B	$2.8B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$6.8B

Terminal Growth Rate2.50%

WACC9.38%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$100.8B

PV of Terminal Value$41.1B

Exit Multiple Method

Year 10 EBITDA$8.9B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$107.1B

PV of Terminal Value$43.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$36.7B

PV of Terminal Value$41.1B

Enterprise Value$77.9B

(-) Net Debt-$4.2B

Equity Value$82.1B

Shares Outstanding$95M

Price per Share$866.11

Exit Multiple Method

PV of Projected FCFs$36.7B

PV of Terminal Value$43.7B

Enterprise Value$80.4B

(-) Net Debt-$4.2B

Equity Value$84.7B

Shares Outstanding$95M

Price per Share$893.12

Pure Model Fair Value

$879.62

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
7.38%	$1,036.77	$1,096.18	$1,167.76	$1,255.67	$1,366.23
8.38%	$903.20	$942.59	$988.68	$1,043.34	$1,109.19
9.38%	$807.38	$834.76	$866.11	$902.38	$944.81
10.38%	$736.20	$755.91	$778.13	$803.35	$832.24
11.38%	$681.90	$696.49	$712.73	$730.91	$751.39

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$728.29

54.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.56

Base Case

$879.62

86.7% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.25

Bull Case

$1,038.70

120.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 1.06

Key Assumptions & Drivers• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth2.88%

Year 3 Revenue Growth4.68%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin34.12%

Tax Rate20.89%

Historical Capex / Rev0.86%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (S&P 500: 22x P/E)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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