Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

On May 21, 2013, shares of American Express Co. (AXP - Analyst Report), also known as AmEx, hit a 52-week high of $75.11. The company reported first-quarter results with a positive earnings surprise of 3.6%. AmEx delivered positive earnings surprise in all of the last 4 quarters with an average beat of 4.1%.

On Apr 18, AmEx reported its first-quarter 2013 operating earnings per share of $1.15. The result comfortably surpassed the Zacks Consensus Estimate of $1.11 and the year-ago quarter earnings of $1.07 a share.

Results reflected improved global card spending, net interest income and the loan portfolio. Further, delinquency rates and yield exhibited stability, partially offset by lower lending balances. Further, moderate top-line growth was supported by strict expense control, which helped the overall increase in bottom line, book value per share and effective capital deployment.

Subsequently, AmEx repurchased shares worth $802.5 million in the first quarter of 2013 as it successfully attained the approval from the Federal Reserve to buy back shares worth $3.2 billion in 2013. Another $1.0 billion worth of share repurchase can be initiated in the first quarter of 2014.

We believe that improved credit trends, new business initiatives, capital flexibility and stable ratings bode well for long-term growth, which is reflected by the consistent dividend hike and accelerated share buybacks.

The company returned 70% of its capital generated, in the first quarter of 2013, to shareholders via share buybacks and dividend payouts. On a cumulative basis, AmEx has distributed 66% of capital generated through dividends and share buybacks since its inception in Dec 1994. This injects ample confidence among the shareholders.

Meanwhile, valuation looks reasonable for AmEx. The shares are trading at 5.2% premium to the peer group average on a forward price-to-earnings basis and 193.8% premium to the peer group average on a price-to-book basis. Both return on equity and return on assets are 306% and 154%, respectively, above the peer group average. Nevertheless, the 1-year return from the stock is 35.6%, much above S&P 500’s return of 28.9%. The overall long-term expected earnings growth rate for this stock is 10.9%, which is slightly below the peer group.

AmEx currently carries a Zacks Rank #3 (Hold). Among others in the industry, Moody’s Corp. (MCO - Analyst Report), EuronetWorlwide Inc. (EEFT - Snapshot Report) and SS&C TechnologiesHoldings Inc. (SSNC - Snapshot Report) carry a favorable Zacks Rank #2 (Buy) and warrant attention.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
GENERAL FINA GFN 8.20 +5.67%
QIHOO 360 TE QIHU 91.57 +4.38%
VIPSHOP HOLD VIPS 140.01 +3.49%
INVESTMENT T ITG 19.16 +3.34%
VERTEX ENERG VTNR 7.38 +3.07%