American Express (AXP) shares surged higher Friday after it forecast solid profit and revenue growth, along with a dividend boost, that offset weaker-than-expected fourth quarter earnings.
American Express said earnings for the three months ending in December came in at $2.09 per share, down 4.1% from the same period last year and 13 cents shy of the Street consensus forecast of $2.22 per share. Group revenues, American Express said, rose 17% to $14.2 billion, essentially matching analysts' forecasts of a $14.22 billion tally, thanks in part to the highest card member spending on record.
The group also boosted its quarter dividend by 15%, to 60 cents per share, staring in the first quarter.
Looking into the 2023 financial year, American Express said it now expects group revenues to rise by between 15% and 17%, with earnings in the region of $11 to $11.40 per share, compared to the Refinitiv forecast of around $10.55 per share.
"Our performance demonstrates that our strategy is working, and our business is in an even stronger position today than before the pandemic," said CEO Stephen Squeri. "We have significantly grown the company’s revenue base by investing in our value propositions, increasing our generational relevance, growing merchant acceptance, introducing new digital capabilities, and enhancing our Membership Model with new lifestyle offerings and financial services."
"This has led to sustained growth in customer acquisitions – which reached a record 12.5 million new Card accounts in 2022 – along with high levels of engagement and retention, which has enabled us to build scale while driving momentum across our core businesses," he added.
American Express shares were marked 12.2% higher in early afternoon trading Friday following the earnings release to change hands at $174.82 each, pegging the stock's six-month gain at 15.3%.
Earlier this week, Mastercard (MA) said "remarkably resilient" consumer spending helped its top Wall Street forecasts with fourth quarter earnings of $2.65 per share and revenues of $5.8 billion. Gross dollar volumes were up 8%, the group said, while purchase volumes rose 11%.
Visa (V), also, posted better-than-expected first quarter earnings thanks in part to a surge in cross-border spending amid the ongoing travel boom.
