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Financial Skeptic

Accentuating the caveat emptor with critical commentary concerning investor relations and financial communications. I look at how information is (mis)managed and manipulated thereby creating possible investors losses.

Amex Profits Do You Believe?

Posted on 04/21/2007 09:54:33 | Link | Post Comment
American Express (NYSE:AMP) reported excellent numbers. 10% increase in revenues with a 21% increase in net income. Just the type of leverage that you want to see from a company who has invested heavily in re-engineering. Amex is still reporting some residual expenses attributable to the re-engineering process.

Bershire Hathaway (NYSE:Brk.A), Warren Buffets vehicle for wealth creation, has long held substantial ownership. Now that the business plan seems to have sparked properly the question becomes how to value the stock? In particular the dividend needs to be addressed.

The current dividend yield is approximately 1% which is roughly half the S&P dividend yield. Value investors will want to be rewarded. A dividend rate consistently stuck at half the market bench mark yield is not acceptable for value investing.

Either the dividend goes up or management is telling you something.
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