The shares of American Express Company (NYSE:AXP) slid nearly 2 percent in the after-hours trading post the announcement of fourth quarter 2014 financial results. Despite of an increase in revenue and net income, the investors seemed worried about the increasing expenses in addition to heightened growth expectations from the card issuer company. The credit card issuer company announced its restructuring plans for the next year with up to 4,000 job cuts.
In the past several quarters, American Express has been struggling to cut down its expenses while trying to meet investors’ expectations. While announcing its quarterly results, American Express Company (NYSE:AXP) took pre-tax charges of $313 million in the recent quarter aimed towards better operating efficiencies.
Marina Hoffmann, spokeswoman for American Express, said,
“More than 4,000 employees will be impacted by the restructuring. This will occur over the course a year throughout the organization.”
The company has current workforce of nearly 63,000 and these layoffs would affect nearly 6 percent of its employees.
In addition to it, American Express has faced difficulty in meeting its revenue growth target of 8 percent, although the company has fulfilled its earnings growth targets. At the same time, the growing economy and more drifting towards plastic than cash and checks has triggered higher investor expectations.
In its fourth quarter 2014 financial results, American Express Company (NYSE:AXP) reported 3 percent increase in its expenses. In addition to expenses, John Hecht, Jefferies analyst, mentioned lower merchant discounts in the quarter affecting the profit margins of the company.
American Express announced its fourth quarter 2014 financial results with quarterly revenues of $9.10 billion, 7 percent higher than the previous year period. American Express Company (NYSE:AXP) improved its net income by 11 percent at $1.45 billion versus the prior year quarter. The credit card issuer company announced diluted earnings per share of $1.39 for the quarter.
The shares of American Express are trading at $87.67 with current P/E ratio of 16.39.
This article has been written by Prakash Pandey.