American Express Compan
) announced its preliminary results for the fourth quarter of
2012. According to the results, net income was $1.2 billion or
$1.09 per share in the quarter compared with $1.2 billion or
$1.01 per share in the year-ago quarter. Net income surpassed the
Zacks Consensus Estimate of $1.05 per share.
Net income for the fourth quarter of 2012 excludes the impact
of a $400 million restructuring charge ($287 million after-tax),
expense of $342 million ($212 million after-tax) related to
improved process for the estimation of Membership Rewards points
redemption for card members and $153 million ($95 million
after-tax) related to reimbursements made to card members for
prior-year transactions including fees, interest, bonus rewards
and incremental expenses related to consent orders.
The restructuring charge primarily includes severance payments
to about 5,400 employees, expected to be discharged in 2013.
However, American Express also expects to create more jobs during
the year, leading to an overall decline of 4%-6% in 2013. The
current staff strength stands at 63,500.
Including the above-mentioned charges, reported net income
amounted to $637 million or 56 cents per share. American Express'
total revenues, net of interest expense, came in at $8.1 billion,
increasing 5% from $7.7 billion in the year-ago quarter. Revenue
was almost in line with the Zacks Consensus Estimate of $8.09
American Express reported an 8% increase in card member
spending over the fourth quarter of 2011, even after the decline
witnessed in October-end and early November 2012 due to the
impact of Hurricane Sandy. The write-off rate for the U.S.
lending portfolio (principal only) was at a historically low
level of 2%. Other credit indicators were also at historically
Despite the uneven economic scenario, American Express
generated strong results including improved card member spending,
enhanced revenue and improved credit quality. The company is
expected to disclose its complete fourth quarter and full year
2012 financial results on January 17, 2013.
American Express currently carries a Zacks Rank #4 (Sell). We
maintain a long-term Neutral recommendation on the stock. Peers
) carry a Zacks Rank #2 (Buy).
AMER EXPRESS CO (AXP): Free Stock Analysis
MASTERCARD INC (MA): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
To read this article on Zacks.com click here.