American Express (NYSE:AXP), an integrated payments company, announced a new share buyback plan. In addition, AXP hiked its quarterly dividend. While the move will enhance shareholders’ value, analysts are not enthusiastic about AXP stock.
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Let’s Delve Deeper
American Express said it would repurchase up to 120 million shares in the coming years. This replaces its 2019 share buyback plan, which still had approximately 36 million shares remaining to be repurchased.
Separately, the company announced a 15% hike in its quarterly dividend to $0.60 a share. Based on its recent closing price of $174.83, AXP now offers a forward dividend yield of 1.37%.
It’s worth highlighting that American Express returned $4.9 billion to its shareholders in 2022 through share repurchases and dividend payments. These payments reflect AXP’s ability to deliver sustainable and profitable growth.
AXP’s revenues increased 25% year-over-year in 2022, despite a challenging macro environment. Moreover, its earnings of $9.85 per share were ahead of its guidance.
American Express expects a 15-17% growth in its revenue in 2023. At the same time, it projects to deliver EPS between $11.00 and $11.40, reflecting a healthy year-over-year improvement.
What’s the Prediction for AXP Stock?
AXP’s focus on customer acquisitions, strong credit metrics, and upbeat revenue guidance will likely support its stock. However, analysts remain sidelined as macro headwinds pose significant risks and could hurt its growth prospects.
AXP stock has seven Buy, six Hold, and three Sell recommendations for a Hold consensus rating. These analysts’ average price target of $178.81 reflects 2.28% upside potential.
