The Friday trading session was full of fortunes and strong gains for American Express. The shares of the company rose significantly due to two major announcements.
The announcements even managed to offset the weaker earnings that the company reported for the fourth quarter of 2022.
American Express’s Announcement
The officials at American Express reportedly shared a strong forecast. They predicted that they are looking at strong revenue growth and they are aiming to do the same for profits.
In addition to the above, the payment services company has also revealed that they will be introducing a boost in dividends.
This was a major announcement for the shareholders and they started to rally in favor of the company’s shares.
The share prices for American Express went up right after the company made the announcements on Friday.
Despite the major announcements, American Express did talk about its earnings. The company reported that its earnings in the fourth quarter were weaker than expected.
Even then, the company’s shares went up as the investors were too excited to hear about the outlook and the dividend boosts.
Earnings Reported for the Fourth Quarter by American Express
For the fourth quarter, American Express reported that the earnings they generated were $2.09 per share. The earnings were 4.1% lower than what they were recorded in the same quarter of 2021.
On the other hand, the analysts had predicted that the company may hit earnings of $2.22 per share. This means that the actual earnings were 13 cents lower than the expectations set by the analysts.
The revenue that the group reported for the same quarter was $14.2 billion. The officials revealed that compared to the same quarter from a year back, their revenue has risen by 17%.
Despite the boost in revenue compared to 2021, the company failed to meet the estimate shared by the analysts. For the same quarter, the analysts had set the forecast to $14.22 billion.
15% Boost in Dividends
The company officials announced that they have made changes to the dividends and they will be implemented in the first quarter of 2023.
The quarterly dividends have been increased by the company by 15%, which translates to 60 cents per share. The change is to take right away so the investors will be able to benefit from the change without any delays.
Outlook for 2023
American Express is extremely excited for the entire year of 2023. They are hoping to deliver the best financial year and expect that they will be seeing a significant rise in their revenues.
The company has projected that for the entire year of 2023, they expect their revenues would rise by 15% at the least and 17% at max.
The company’s earnings target is also higher than what the analysts have set for the year 2023. American Express is expecting to hit earnings of around $11 to $11.40 per share but the actual figure can be higher.
As for the Refinitiv analysts, they have set the earnings forecast to $10.55 per share for the entire year of 2023.
Stephen Squeri’s Remarks
The chief executive officer at American Express was pleased to talk about the performance of their company.
He stated that their performance goes to show that the business model and strategy they have adopted are working out in their favor.
Yes, the pandemic had a huge role to play in bringing down the financial sector. But the digital banking and payment sector thrived, so they are glad that they had access to such technologies.
Their business was growing even before the pandemic had caused major lockdowns. However, the business growth they have started to witness in the year 2023 is much better than the analysts’ expectations from the past year.
After the announcement, the share prices for American Expressed went up by a significant number. The share prices for the company have been pushed higher by 12.32 billion.
Following the announcement, the share prices for American Express have experienced a major boost. The report shows that the value of the company’s shares has surged by 12.2%.