On Mar 27, 2013, shares of
American Express Company
) hit a 52-week high of $67.26. The momentum was driven by the
approval of the company's capital plan in its second attempt
earlier this month. The first capital plan was rejected in
January as it was adversely impacting the company's capital
On Mar 14, American Express announced that the Federal Reserve
approved the company's capital plan for the next one year.
The regulatory body gave consent to hike American Express'
dividend by 15% to 23 cents per share from the second quarter of
2013 and buyback shares worth $3.2 billion in the last three
quarters of 2013 and another $1.0 billion in the first quarter of
Following the approval, American Express authorized a new
share buyback program for 150 million shares, replacing the
earlier repurchase program, which had 70 million shares available
Apart from the capital plan, American Express' strong earnings
in the fourth quarter of 2012 also contributed to the momentum in
share price. On Jan 17, 2013, the company reported its
fourth-quarter 2012 operating earnings per share of $1.09, which
was in line with the Zacks Consensus Estimate but climbed from
$1.01 in the year-ago quarter.
American Express witnessed positive earnings surprise in 2 out
of 4 quarters of 2012, with an average surprise of 5.78%.
Moreover, the company reported positive earnings surprise in 8
out of the past 10 quarters.
The valuation of American Express looks attractive. The shares
are trading at a discount on a price-to-book and forward
price-to-earnings basis, while the return on equity of 26% is
significantly higher than the peer group average of 6.7%.
American Express currently carries a Zacks Rank #3 (Hold).
Some companies worth considering in the financial sector are
Euronet Worldwide Inc.
SS&C Technologies Holdings, Inc.
). All these companies carry a Zacks Rank #1 (Strong Buy).
AMER EXPRESS CO (AXP): Free Stock Analysis
EURONET WORLDWD (EEFT): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
SS&C TECHNOLOGS (SSNC): Free Stock Analysis
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