On Thursday, American Express (NYSE:AXP), a financial services company based in New York City, announced its earnings report, which then caused an immediate wave in the market after it was posted.
What Happened?
In the report, American Express announced that its earnings per share came in at $1.58. As a point of comparison, Wall Street, according to Thomson Reuters, was forecasting the company to see earnings per share of $1.54.
Originally founded as an express mail business in the 1800’s, American Express has transformed into a world-famous financial services company, now known primarily for providing travel services, loans, and charge and credit card products.
American Express also reported in the earnings release that it saw an increase in revenue, bringing in $8.84 billion versus Wall Street’s expectations of $8.72 billion.
Despite a relatively positive report, investors couldn’t focus on anything other than the fact that the company stated that it was going to be suspending, for the time being, its buyback program. Why? Because of the recent tax overhaul.
The earnings release on Thursday included a statement from CEO Ken Chenault in which he stated that American Express was going to halt its buyback program for the first half of 2018. Again, the public is asking why? According to Mr. Chenault, American Express came to a consensus, agreeing that the company wants to work on rebuilding its capital due to the upfront charge prompted by the new tax law.
As of this writing, American Express is trading at $99.86, which puts the AXP stock down $0.90, or 0.89%.
Considering the stock is trading down, it appears investors are not happy with the company’s decision to temporarily halt its buyback program, despite Chenault stating that AmEx will continue to pay its quarterly dividend, adding that the new tax law will have a positive effect on the company and the United States economy sooner or later.
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