NEW YORK (TheStreet) -- American Express (AXP) shares are gaining 0.77% to $79.69 in afternoon trading on Wednesday after the credit card company announced that its board authorized a new stock buyback program and hiked its dividend payout.
The company's stock rose in after-hours trading yesterday after the company announced its plans to purchase up to 150 million shares of its stock, replacing a former share buyback plan that was 45 million shares away from completion.
The New York City-based company also announced plans to raise its quarterly dividend payout 12% to 29 cents per share payable August 10 to shareholders of record on July 2.
TheStreet Ratings team rates AMERICAN EXPRESS CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN EXPRESS CO (AXP) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, growth in earnings per share, attractive valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Consumer Finance industry average. The net income increased by 6.5% when compared to the same quarter one year prior, going from $1,432.00 million to $1,525.00 million.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.7%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- AMERICAN EXPRESS CO has improved earnings per share by 11.3% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AMERICAN EXPRESS CO increased its bottom line by earning $5.55 versus $4.88 in the prior year. For the next year, the market is expecting a contraction of 0.9% in earnings ($5.50 versus $5.55).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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.
- You can view the full analysis from the report here: AXP Ratings Report