Best Performer: American Express
My second selection is American Express (NYSE:AXP), whose credit card business continues to deliver more than satisfactory results. Its adjusted net income per share in 2012 was $4.40, 6.8% higher than in 2011. Revenues increased 5% year-over-year to $31.6 billion (net of interest expense) with its U.S. Card Services delivering over half that total.
But the real winner this past year for AmEx was its Global Network & Merchant Services segment, whose revenues grew 7% year-over-year to $5.3 billion while delivering 12% growth in net income. Even better, the segment delivers 27% of AmEx’s overall profit from just 17% of its overall revenue. In 2012, its basic cards-in-force (excludes supplemental cards) outside the U.S. exceeded those domestically for the first time in its history. That bodes well for its future.
Not that you need any additional reasons to own American Express, but it goes without saying that Berkshire Hathaway‘s (NYSE:BRK.B) 13.7% stake in the company (its largest shareholder by wide margin) represents a genuine stamp of approval. In his annual letter to shareholders, Warren Buffett indicated that it would likely increase its ownership interest in American Express in the future, calling it an extraordinary business.
Need I say more?