American Express announced it will be temporarily suspending its buyback program after the recent tax overhaul.
In the company’s Thursday earnings release, CEO Ken Chenault said AmEx will suspend its buyback program for the first half of the year. The CEO said the company made this decision to rebuild its capital because of the upfront charge triggered by the new tax law.
He said, however, that the company will continue to pay its quarterly dividend. Chenault said he believes the new tax law will ultimately have a positive effect on both the U.S. economy and the company.
American Express also reported quarterly earnings and revenue that beat analysts’ expectations on Thursday.
Here’s how the company did compared with what Wall Street expected:
- EPS: $1.58 vs. $1.54 expected according to Thomson Reuters
- Revenue: $8.84 billion vs. $8.72 billion expected according to Thomson Reuters
The company’s stock dipped nearly 2 percent after the company released its filing with the Securities and Exchange Commission.
In October, the company announced that Chenault would be retiring in February. Chenault will be succeeded by current Vice Chairman Stephen Squeri.
Berkshire Hathaway’s legendary value investor and longtime AmEx stakeholder Warren Buffett praised Chenault’s impact on the company.
“Ken built on its storied history — not by abandoning traditional strengths, but by building on them and adding new ones,” Buffett said.
The company is expected to benefit from the tax reform legislation recently passed by congressional Republicans and the Trump administration. In its first analyst report on the financial services giant, Deutsche Bank gave AmEx a “buy” rating due in part to the anticipated effects of tax reform and deregulation.
This is breaking news. Please check back for updates.
