Thursday, March 7, 2013

US Big Credit Card Corps 2012 Annual Earnings Up 10.0% and EPS Up a Much Higher 14.4%

There are 4 large US Credit Card companies.

How did these 4 Big  Credit Cards do on the earnings front in annual 2012?  Very well.

Non-GAAP Adjusted After-tax Net Income, which is generally used by the investment community to value common stocks, was used when this amount was disclosed in the company's earnings release, and it excludes Special, Unusual Items which are significant in amount relative to Reported GAAP Net Income. 

The Total Non-GAAP Adjusted After-tax Net Income of these 4 US Big Credit Card Corps was $14.4 bil in annual 2012, up a healthy 10.0% over 2011.

And on an Earnings Per Share basis, the total growth was a much more robust 14.4%, which was a company-earnings-weighted 4.4%, or 44%, higher than the 10.0% total earnings growth.

So, what's with this substantial add-on 4.4% earnings growth on an EPS basis, as compared with the 10.0% growth on just an earnings growth basis.  After all, EPS and EPS growth are what drive common stock prices.

It's the massive common stock buyback programs that all 4 of these US Big Credit Card Corps have.  The US Fed has facilitated this with its extremely low interest rates, which makes these common stock buyback programs incredibly lucrative for all large US Corps, and the Big Credit Card Corps have clearly taken this common stock buyback strategy to a completely different level.

But the problem with these massive stock buyback programs is that they only benefit the very wealthy and they further expand the huge wealth gap between the very wealthy and everyone else, including small businesses, who are not able to take economic advantage of it.

Below here is the Non-GAAP Adjusted After-tax Net Income for both annual 2012 and 2011 for each of these 4 US Big Credit Card Corps:




Annual Annual Adjusted Adjusted

2012 2011 Net Net Adjusted Growth

Non-GAAP Non-GAAP Income Income EPS Positive

Adjusted Adjusted Increase Increase Increase %

Net Net (Decrease) (Decrease) (Decrease) Spread
Company FYE Income Income Amount % %

mils of $s mils of $s mils of $s

US Big Credit Card Corps

American Express Dec 5,076 4,935 141 2.9% 7.5% 4.6%
Visa Sep 4,203 3,528 675 19.1% 24.2% 5.1%
MasterCard Dec 2,772 2,401 371 15.5% 17.9% 2.4%
Discover Financial Services Nov 2,318 2,202 116 5.3% 9.9% 4.6%

Total all 4
14,369 13,066 1,303 10.0% 14.4% 4.4%