Friday, January 22, 2010

American Express -- Is It Really Better??

American Express (AXP) released stellar results and would have you believe that “We still face the challenge of high unemployment levels, depressed real estate values, and shrunken household balance sheets, but the overall economy and our company are in stronger shape than they were a year ago.” But they say that now they are able to shift their focus for growth but still expect the economy to be growing slowly.

Stated in another way they claim their portfolio is pristine and has stopped hemorrhaging losses. That’s entirely unique from the rest of the credit sector even if American Express is supposedly crème de la crème. The stock sold off along with the rest of the market. But if earnings are going to be so damn good why not do a dividend signal and reward long suffering shareholders. The current dividend yield is about 1.7% with the stock near their 52 week high. If the house is in order then act like it. Otherwise it’s just management talking through their hat.