American Express Shares Increase Despite Lower Earnings, Driven by Dividend Increase.
Mondeum Capital (UK) Limited
American Express reported fourth-quarter results that fell short of expectations, with profit totaling $1.6 billion and earnings per share of $2.07. Revenue for the quarter amounted to a record $14.2 billion, an increase of 17% from the year-ago quarter. Wall Street was more interested, however, in the company’s plans to return capital to shareholders.
AmEx’s profit saw a drop attributed partly to a $492 million increase in its reserve for credit losses, compared to a release of $168 million a year ago. Additionally, the card company’s expenses rose 15%, due to an increase in compensation and higher customer engagement costs. Despite these challenges, AmEx achieved 25% revenue growth and exceeded prior guidance. This was driven by a higher usage of cards for travel and other purchases by households and businesses. In line with its positive results, the company is rewarding shareholders with a 15% boost in the quarterly dividend to 60 cents a share.
American Express (AmEx) has projected revenue growth of 15 to 17 percent and earnings per share of $11 to $11.40 in 2023. Squeri, CEO of AmEx, noted on Friday that their strategy is paying off, and that business has been strengthened since the start of the pandemic. The stock value rose by 5% in premarket trading, following other credit card companies such as Mastercard and Visa, who have also seen significant success in spite of the economic troubles.
This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.
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