American Express Worst Performing Dow Stock, Down 23%

Banking, finance, and taxes

Published: January 31, 2016 8:40 am

Last Updated: January 13, 2020 1:52 pm

American Express (NYSE: AXP) cannot get it right. Retailers reject it. Consumers do not view it as the Rolls Royce which once sat atop the credit card universe. American Express share fallen off by 23.8% so far this year, posting the worst performance among the 30 DJIA (DOW) components. The Dow’s performance, down 5.5% to 16,466.30 for the same period

Long time American Express Chairman and CEO Kenneth I. Chenault announced numbers well below forecasts. Revenue dropped 4% last year to $32.8 billion, and net income fell off 12% to $5.2 billion.

Worse:

“A number of cyclical factors in the broader economy have also weighed on our performance and influenced our outlook. Against that backdrop, and the fact that revenue growth has not accelerated as we anticipated, we are moving aggressively to streamline the company and drive efficiencies in order to take out $1 billion from our overall cost base by the end of 2017.

“We now expect 2016 EPS between $5.40 and $5.70. This reflects a substantial benefit from the planned sale of the Costco co-brand portfolio, offset in part by a continuation of elevated spending on growth opportunities as well as the loss of a partial year of Costco-related earnings. The portfolio transaction is expected to occur mid-year.

“For 2017, we are now targeting EPS of at least $5.60. That includes growing over the portfolio gain and this year’s Costco-related earnings. It also includes a combination of accelerated revenue growth, aggressive expense reductions and the use of our capital strength to create value for shareholders. The 2016-17 earnings targets do not include restructuring charges or other contingencies.

“We have a great set of assets to draw upon, including a trusted brand, financial strength, an integrated business model, world class service and a history of innovation. We’re confident that we’ll not just deal with our near-term challenges, but return to growth and position the company for long-term success.”

Ugliest trumped a “great set of assets”. Chenault’s credibility disappeared. Shares sold off to $52.15, from a 52-week high of $86.18.

No future, no price recovery

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