American Express shares surged Friday after the U.S.’ second-largest credit card company posted strong quarterly earnings, with American Express brass boasting about its wealthier consumer base’s resilience even as the U.S. economy borders on recession.
American Express shares soared Friday.
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Key Facts
American Express reported $14.18 billion in revenue and $2.07 earnings per share, each below analyst expectations, but the stock rose 11% as investors latched onto an optimistic outlook from the company and a planned 15% increase in quarterly dividends to $0.60 per share.
“We aren’t seeing recessionary signals,” CEO Stephen Squeri told Yahoo Finance after his company reported its highest-ever quarterly cardholder spending.
Squeri’s assertion came even as the latest consumer spending data revealed Americans spent 1.1% less on retail last month compared to November.
But credit card companies have largely benefited as consumers take on debt to tackle surging inflation: Credit card balances rose 15% on an annual basis last year, according to the New York branch of the Federal Reserve, the largest annual increase in more than 20 years.
Key Background
Inflation tends to impact poorer consumers more as they spend a greater portion of their income on price-sensitive goods and have less savings to dip into. The guidance on high-end consumers’ spending habits amid a poor macroeconomic environment was “much better than expected,” Goldman Sachs analysts led by Ryan Nash wrote in a Friday note to clients. Inflation remains at multi-decade highs even as it ticks down following the Federal Reserve’s hikes to the federal funds rate, subsequently sending credit card interest rates to multi-year highs. American Express shares are down 3% over the last year, outpacing the S&P’s 6.3% decline during the period. The Dow Jones Industrial Average, S&P and tech-heavy Nasdaq each notched gains below 1%.
First Business Financial Services, Inc. (the “Company” or “First Business Bank”) (Nasdaq: FBIZ) announced its board of directors has declared a quarterly cash dividend on its common stock of $0.2275 per share which is equivalent to a dividend yield of 2.72% based on Thursday’s market close price of $33.42. The quarterly dividend represents a 15% increase over the quarterly dividend declared in October 2022, and, based on fourth quarter 2022 earnings per share, represents a dividend payout ratio of 19%. This regular cash dividend is payable on February 16, 2023, to shareholders of record at the close of business on February 6, 2023.
“First Business Bank’s 15% common dividend increase reflects the Company’s high-quality earnings growth and favorable outlook,” said Chief Executive Officer Corey Chambas. “This substantial increase marks our 11th consecutive annual dividend raise. We are pleased to provide an enhanced return to our shareholders while maintaining a dividend payout ratio that allows for the ongoing and significant investment in talent, technology, and products that power our business growth engine.”
The board of directors also declared a dividend on the Company’s 7% Series A Preferred Stock of $17.50 per share, payable on March 15, 2023, to shareholders of record on February 28, 2023.
Share Repurchase Authorization
Effective January 27, 2023, the Company’s board of directors authorized the repurchase by the Company of shares of its common stock with a maximum aggregate purchase price of $5.0 million, in such quantities, at such prices, and on such other terms and conditions as the Company’s Chief Executive Officer or Chief Financial Officer determine in their discretion to be in the best interests of the Company and its shareholders, any time from the effective date through January 31, 2024.
About First Business Bank
First Business Bank specializes in Business Banking, including Commercial Banking
It’s totally plausible for economists, investors, stock pundits, and others to have very different views about the economy and the stock market’s outlook. But when it comes to the travel sector, I think it’s crystal clear that the space is continuing to boom. Therefore, I really think that it’s hard for investors to go wrong by buying travel stocks at this point.
Delta (NYSE:DAL) on Dec. 14 increased its fourth-quarter guidance in one very bullish sign for the travel sector. Moreover, its CEO, Ed Bastian, said, “Demand for air travel remains robust as we exit the year, and Delta’s momentum is building.”
Since, based on Bastian’s statement, it’s clear that the demand for air travel remains strong and appears to be accelerating, most American travel companies are going to be very successful for at least the medium term.
Also worth noting is an optimistic statement in August by the CEO of CWT, a company that coordinates business travel. “Demand for business travel and meetings is back with a vengeance, of that there is absolutely no doubt,” said Patrick Andersen, the CEO.
And providing a succinct, witty endorsement of travel stocks earlier this month was CNBC’s Jim Cramer, who said, “The biggest theme is the rise of this ‘life is too short’ mentality. People don’t want to waste their time anymore.”
Ticker
Company
Price
H
Hyatt
$111.82
BKNG
Booking Holdings
$2,402.34
MGM
MGM
$40.28
MTN
Vail Resorts
$254.26
AAL
American Airlines
$16.02
UBER
Uber Technologies
$29.93
EADSY
Airbus
$32.81
Hyatt (H)
Source: EQRoy/Shutterstock.com
Morgan Stanley, whose outlook on American stocks tends to be quite bearish, is nonetheless very upbeat on Hyatt (NYSE:H). The investment bank is bullish on the entire hotel sector, as
Consumers spend more than 70% of their awake time away from home, but OOH advertising accounts for only 5% of the average marketing budget of American companies. In the past few years, businesses have embraced online mobile-based digital advertising because of the convenience and large audiences. However, OOH advertising is posed to be a more cost-effective option.
According to reports by Solomon Partners, newspaper advertising is far more cost-inefficient, with a CPM of up to $39. The world is beginning to realize how much of an intelligent option OOH advertising is, and businesses are taking action. In 2022, OOH advertising experienced a 25.7% growth and has been experiencing consistent breakneck growth since 2019, according to the OAAA.
As OOH ads take center stage in marketing, a few principles may fly out the window. No matter what goes amiss in the evolution of OOH advertising, marketers should be centered on these three pillars of OOH optimization to maximize ROI. This is more important than ever, especially in the technology industry, where connecting with customers and getting them online is essential.
Precise messaging is key.
Precise communication is a tricky thing, especially when it comes to advertising. You have so much to say about your product. How can you say everything in fewer than 10 words?
In truth, you only have to say the indispensable and let your audience figure out the rest of their journey with your product/service. Nevertheless, communicating the indispensable is a challenging task. You can use this checklist to ensure you’re precisely communicating your product or service.
• Define your audience. If you have a broad demographic of audiences, segment and elaborately define each segment. Then adapt your message for each audience.
Quarterly results from credit card giants Mastercard (MA), Visa (V), and American Express (AXP) out this week added further evidence consumers remain in good shape amid elevated inflation and swirling recession fears.
“We aren’t seeing recessionary signals,” American Express CEO Stephen Squeri told Yahoo Finance’s Brian Sozzi on Friday.
These comments echo similar notions set forth by Squeri’s peers at Mastercard and Visa just a day before.
“While macroeconomic and geopolitical uncertainty persists, consumer spending has been remarkably resilient,” said Michael Miebach, Mastercard CEO, in the company’s earnings statementon Thursday. “We are well prepared to adjust our investment profile quickly if needed.”
Visa CFO Vasan Prabhu told analysts on the company’s call Thursday afternoon, “business trends have been remarkably stable.” At the end of the firm’s fiscal year — which wrapped up in September 2022 — Visa planned for no recession hitting its business in fiscal 2023. Right now, the company sees “no evidence” of a change in that trend.
Shares of American Express were up about 10% on Friday following its quarterly results, while Visa stock gained about 2%. Mastercard, which reported results before the open on Thursday, saw shares little-changed.
Results from these companies come as fears over an impending recession in the U.S. abroad continue to dominate the conversation for investors.
The latest reading on GDP growth out Thursday showed the U.S. economy finished 2022 in a stronger-than-expected position.
Retail sales data for December out earlier this month, however, suggested some moderation to cap last year.
In a note to clients, Mizuho analyst Dan Dolev said both Mastercard and Visa provided volume data that showed slowing consumer purchases between November and December. However, unlike Mastercard, Visa added purchasing volume from January.
“Healthy U.S. January trends should offer a sigh of relief amid broader slowdown concern,” Dolev
Earnings for the fourth quarter haven’t been as dire as some investors feared, but they are likely to continue to deteriorate. With 143 companies of the S & P 500 reporting, Refinitiv early Friday said the beat rate for earnings per share was 67.8%, slightly above the average 66% pace. Revenues have been beaten forecasts 65% of the time so far, compared to a 62% long-term average. But when it came to the size of the beat, companies this quarter appear to be lagging. Earnings in aggregate topped estimates by just 1.6%, well below the 4.1% since 1994 and the 5.3% average of the last four quarters, according to I/B/E/S data from Refinitiv. Earnings for all S & P 500 companies fell 2.9% for the fourth quarter, based on actual reports and estimates. When energy is excluded, earnings are down 7.1%. Revenues, on the same blended basis, are up 4.2% but they are larger than expectations by just 0.6% in aggregate, less than half the long term average, according to Refinitiv. “If we’re moving forward and you’re already down 7% non-energy earnings in an up 3% quarter for GDP, that doesn’t necessarily bode well going forward,” said Brian Rauscher, Fundstrat head of global portfolio strategy and asset allocation. Stock strategists have been expecting an ‘earnings recession,’ meaning more than one quarter of negative growth. Some strategists expect that to coincide with an actual recession in the economy, which could make the earnings picture even weaker. That also means stocks could face a bumpy ride as expectations continue to slide. “My takeaway from the guidance has been the sequential weakening of forward guidance, which began when you got first quarter reports in April,” said Rauscher. “Every quarter the guidance has been weaker and weaker. Yes, there’s an occasional higher quality company
Retailer Home Depot shared details from electronic receipts with Meta, which operates the Facebook social media platform, without the knowledge or consent of customers, the federal privacy watchdog has found.
In a report released Thursday, privacy commissioner Philippe Dufresne said the data included encoded email addresses and in-store purchase information.
If they did have an account, Meta compared what the customer bought at Home Depot to advertisements sent over the platform to measure and report on the effectiveness of the ads.
Meta was also able to use the customer information for its own business purposes, including user profiling and targeted advertising, unrelated to Home Depot, the commissioner found.
It is unlikely that Home Depot customers would have expected their personal information to be shared with a social media platform simply because they opted for an electronic receipt, Dufresne said in a statement.
He reminded companies that they must obtain valid consent at the point of sale to engage in this type of activity.
“As businesses increasingly look to deliver services electronically, they must carefully consider any consequential uses of personal information, which may require additional consent.”
Home Depot told the privacy commissioner it relied on implied consent and that its privacy statement, available through its website and in print upon request at retail outlets, adequately explained the company’s use of information. The retailer also cited Facebook’s privacy statement.
The commissioner rejected Home Depot’s argument, saying the privacy statements were not readily available to customers at the checkout counter, adding shoppers would have no reason to seek them out.
“The explanations provided in its policies were ultimately
PGC, NPT suit against former employees still ongoing
Published 1:47 pm Saturday, January 28, 2023
Stanton Hall is headquarters of the Pilgrimage Garden Club. (submitted)
NATCHEZ — The Pilgrimage Garden Club and a company it owns, Natchez Pilgrimage Tours, is suing former Pilgrimage Garden Club president, Eugenie Cates, and former manager of Natchez Pilgrimage Tours, Linda Smith, and a new tour company the two have formed.
The lawsuit claims Cates, Smith and their company, Explore While Driving LLC, which is doing business as Little Easy Tours, stole data and proprietary secrets, were deceitful and did not fulfill their duties while still affiliated with the PGC and NPT and poisoned business relationships and contacts, all in order to profit themselves.
Cates, Smith and their company deny the allegations.
Attorneys Christine Crockett White of Balch & Bingham LLP in Jackson and Robert C. Latham of Truly, Smith & Latham PLLC of Natchez represent the Pilgrimage Garden Club and Natchez Pilgrimage Tours.
Natchez Attorney Timothy Blalock represents Cates, Smith and their company, Little Easy Tours.
The lawsuit was filed May 24, 2022, in Adams County Circuit Court. In the suit, the plaintiffs seek damages and “injunctive relief” and claim the defendants breached their fiduciary duties, interfered with plaintiffs’ business relations and misappropriated trade secrets.
The Pilgrimage Garden Club, a non-profit organization, has been the foremost influence on tourism in Natchez since the 1940s, according to the lawsuit.
PGC and NPT claim in the suit that Natchez Pilgrimage Tours has worked to promote the city by facilitating year-round tourism and its numerous sites of architectural and historic significance through print and online advertising and attendance at trade shows. Further, its claims NPT develops and books tours, entertainment, dinners, lodging and special events for national and international individuals and groups.
Jan 24 (Reuters) – U.S. card companies are expected to post the slowest revenue growth in seven quarters, as consumers tighten their purse strings and avoid spending on luxury and big-ticket items.
Revenues at Visa Inc (V.N), Mastercard Inc (MA.N) and American Express Co (AXP.N) are expected to be up 9%, 11% and 15%, respectively, for the three months ended Dec. 31 compared with a year earlier, marking the smallest year-over-year increase since the first quarter of 2021, according to Refinitiv data.
“Consumers are giving up more expensive brands and shifting to more affordable purchases,” said Moshe Katri, analyst at Wedbush.
Card firms pocket a small percentage of the dollar value of transactions and stand to lose out on fees if customers pivot away from buying luxury items.
The typically cheerful holiday quarter, which usually sees heavy discretionary spending as consumers spend on their loved ones, also proved a dampener.
“Consumers have increasingly limited discretionary spending power, and limited needs for general merchandise following the pandemic purchasing surge,” said Marshal Cohen, chief retail industry adviser for market research company NPD Group.
Reuters Graphics
THE CONTEXT
AmEx, however, is in a far better spot on the back of its affluent customer base. The company remains one of the “top picks” due to its focus on high-end customers, according to MoffettNathanson analysts Eugene Simuni and Lisa Ellis.
The company’s delinquency rates were ticking up but remains below pre-pandemic levels, the analysts added, but deterioration of overall consumer credit quality is expected to continue through mid-year.
Card companies as a whole are heading into a murkier 2023, with several signs of an economic slowdown having emerged in recent months.
Shares in Visa, Mastercard and Amex closed last year between 3% and 10% lower.
Mastercard and Visa are set to report quarterly results on
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