NEW YORK (TheStreet) -- American Express (AXP - Get Report) announced that it is spinning off 50% of its travel unit, Global Business Travel, in a $900 million deal that will create a joint venture with an investor group formed by Certares International Bank that includes the Qatar Investment Authority.
The new entity will continue to use the American Express brand and will be headed by Certares founder Greg O'Hara as chairman and Bill Glenn, formerly Amex's Global Commercial Services president, as CEO.
Global Business Travel boasts 14,000 employees, operates in 139 countries. Global Business Travel brought in $29.2 billion in 2012 making it the world leader in corporate travel bookings.
TheStreet Ratings team rates AMERICAN EXPRESS CO as a "buy" with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
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"We rate AMERICAN EXPRESS CO (AXP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMERICAN EXPRESS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AMERICAN EXPRESS CO increased its bottom line by earning $4.88 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($5.48 versus $4.88).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Consumer Finance industry. The net income increased by 105.3% when compared to the same quarter one year prior, rising from $637.00 million to $1,308.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 3.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Consumer Finance industry and the overall market, AMERICAN EXPRESS CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has significantly increased by 109.73% to $344.00 million when compared to the same quarter last year. In addition, AMERICAN EXPRESS CO has also vastly surpassed the industry average cash flow growth rate of 47.63%.
- You can view the full analysis from the report here: AXP Ratings Report