NEW YORK (TheStreet) -- Shares of American Express (AXP) - Get Report were higher in mid-morning trading on Tuesday as the payment services company won a federal court ruling allowing it to prevent merchants from steering customers to peers like Visa (V) and Mastercard (MA).
The United States Court of Appeals for the Second Circuit in Manhattan said American Express could stop businesses that accept its cards from encouraging customers to use rival payment methods that charge the stores lower transaction fees, according to the New York Times.
The decision comes as American Express works to make sure its customers, who pay greater membership fees, don't face any barriers in using its card services. Merchants have expressed aversion over American Express' high swipe fees, or a charge that retailers pay each time a credit or debit card is used, the Times noted.
However, KBW analysts said American Express' fees are "not that dissimilar" from Visa and Mastercard in the segment of the market that American Express operates in.
"We think today's ruling is a positive for American Express as it seems that investors were concerned about the negative impact of potential steering and the ability for the networks to create an environment where merchants would want to steer more frequently," the firm said in an analyst note, according to Barron's.
The firm added that they expect the steering process to take some time to get underway.
Additionally, the New York City-based company today increased its dividend 10% to 32 cents per share. The new dividend will be payable to shareholders on Oct. 7.
American Express also issued a new stock repurchase program of 150 million shares. It replaces the previous 150 million-share program, which had about 50 million shares left.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
The team rates American Express as a Hold with a ratings score of C+. The primary factors that have impacted the rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, growth in earnings per share and attractive valuation levels. However, as a counter to these strengths, it also finds weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow.
You can view the full analysis from the report here: AXP