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American Express (AXP) Reaches 52-Week High: Here's Why

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On Jul 5, the stock of American Express Co.AXP hit a 52-week high of $85.88. The rise in the stock is believed to have been driven by the recent announcement that it will hike quarterly dividend and increase share repurchase.

In the past one year, the stock has returned 42%, outdoing the Zacks categorized Financial-Miscellaneous Services industry's gain of 31% and the return of 15% from the S&P 500 index.

Investors are impressed with "no-objection" received by the company from the Board of Governors of the Federal Reserve System to its capital plan submitted recently. The plan submission was part of the 2017 Comprehensive Capital Analysis and Review (CCAR).

Pursuant to the capital plan, the company will increase quarterly dividend by 9.4% to 35 cents per share, beginning with the third quarter. It also plans to repurchase up to $4.4 billion of common shares during the approval period from the third quarter of 2017 to the second quarter of 2018.

Investors drew solace from the passage of the company's capital plan, which testifies to its adequate capital and that sturdy capital structure under various stress-test scenarios. It also implies that planned capital distributions, such as dividends and share repurchases, are viable and acceptable in relation to the regulatory body's minimum capital requirements.

American Express, which left investors worried after it lost one of its major clients Costco Wholesale Corp. COST , recently calmed them to some extent after winning exclusive rights as a credit card issuer for Hilton Worldwide Holdings Inc. Though the business to be bought under the Hilton deal is very small compared with the loss of Costco, investors are optimistic about several initiatives taken up by American Express to regain its lost glory.

Efforts aimed at driving new card acquisitions across its global consumer and commercial portfolios, expanding merchant coverage, speeding up its lending growth initiatives, providing attractive rewards, and benefits to lure and retain its customers are being viewed favorably by its investors.

American Express carries a Zacks Rank #3 (Hold). Some better-ranked players in the financial services space are Visa Inc. V and Alliance Data Systems Corp. ADS . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Alliance Data beat estimates in two of the last four quarters, with an average positive surprise of 2.15%.

Visa beat estimates in each of the last four quarters, with an average positive surprise of 7.24%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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