Stock indexes capped a wild week with another day in the green. The Dow Jones Industrial Average (DJINDICES:^DJI) fell initially, but recovered by the close, and the S&P 500 (SNPINDEX:^GSPC) set another record.
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As for individual stocks, American Express (NYSE:AXP) slipped after announcing earnings and a large tax bill, and Atlassian Corporation plc (NASDAQ:TEAM) retreated from recent gains despite reporting a strong quarter.
American Express hobbled by large tax-related charge
Shares of American Express fell 1.8% after the company reported fourth-quarter results that beat expectations, but also said it was suspending share buybacks due to the impact of a charge resulting from the new tax law. Revenue increased 10% to $8.84 billion compared with analyst expectations of $8.72 billion. Excluding the effect of the tax-related charge, the company earned $1.58 per share, up from $0.88 in the quarter last year and above analyst estimates of $1.54.
The one-time charge to earnings will be $2.6 billion to cover tax on overseas earnings that have not been repatriated and on a remeasurement of deferred tax assets and liabilities. The amount was greater than the $2.4 billion that the company estimated two weeks ago. The charge reduced American Express' capital ratios, so the company said it was suspending share buybacks for the first half of 2018 while maintaining the dividend.
Card member spending grew 11% and loans increased 14%, while provisions for loan losses were up 33%. Guidance for 2018 earnings per share was given as a range between $6.90 and $7.30, comparing favorably with analyst estimates of $7.09.
"Overall, we believe the Tax Act will be a positive development for both the U.S. economy and American Express," said Chairman and CEO Kenneth Chenault. "Given the momentum in the business and the anticipated benefit of a lower tax rate, we now expect to invest up to $200 million more in 2018 than we originally planned for customer-facing growth initiatives."
Despite the short-term hit from the tax law and a jump in loan loss provisions, the company seems to be on track, and AmEx investors are perhaps just hoping for another year like 2017.
Atlassian continues rapid growth
Collaboration software provider Atlassian announced fiscal second-quarter results that beat analyst estimates, but still saw its shares fall 4.6%. Revenue grew 43% to $212.6 million and non-IFRS net income per share was $0.13, compared with $0.09 in the quarter a year earlier. Wall Street was expecting EPS of $0.12 on sales of $204.5 million.
Atlassian increased its customer count 4.5% since the previous quarter to a total of 112,571. Free cash flow for the quarter was up 52% from last year to $67.8 million, and the company ended the quarter with $679 million in cash and no debt. Looking ahead, Atlassian guided to full-year revenue of $853 million to $857 million, above estimates of $847 million, and adjusted EPS of $0.47 to $0.48, roughly in line with expectations.
"We finished calendar year 2017 with another great quarter," said co-CEO and co-founder Scott Farquhar in the press release. "Our Cloud, Server and Data Center products delivered strong results, and the Atlassian Marketplace, which plays an important role in our continued growth, passed $350 million in lifetime sales."
Despite strong results, the market apparently was hoping for something better from this maker of integrated team collaboration tools. Atlassian investors can't be too upset, though. The stock is still up 15% for the year, and soared 89% last year after the company put together some excellent quarters.