Should Amex Get More Credit For Its Q3 Report?

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American Express Co. (NYSE: AXP) released third quarter financial results after markets closed Thursday. The company reported $1.88 in earnings per share (EPS) on $10.14 billion in revenue versus consensus estimates that called for $1.76 in EPS on $10.05 billion in revenue. The same period from last year had $1.50 in EPS on $8.44 billion in revenue.

This was the sixth consecutive quarter of strong adjusted revenue growth, up 9% or up 10% excluding foreign exchange rates. The increase reflected higher spending by consumer, small business, and corporate Card Members, as well as higher loan volumes and fee income.

In terms of its segments, the company reported third quarter results as:

  • Global Consumer Services Group reported third-quarter net income of $779 million, up 15 percent from $680 million a year ago. Total revenues net of interest expense were $5.4 billion, up 11 percent from $4.9 billion a year ago. The rise primarily reflected higher loans, Card Member spending, and fee income.
  • Global Commercial Services reported third-quarter net income of $606 million, up 20 percent from $505 million a year ago. Total revenues net of interest expense were $3.2 billion, up 9 percent from $2.9 billion a year ago. The increase primarily reflected higher Card Member spending.
  • Global Merchant and Network Services reported third-quarter net income of $580 million, up 38 percent from $420 million a year ago. Total revenues net of interest expense were $1.6 billion, up 2 percent from $1.5 billion a year ago. The increase primarily reflected higher Card Member spending, partially offset by a decrease in the average discount rate, and lower revenues from network partners.
  • Corporate and Other reported third-quarter net loss of $311 million compared with net loss of $246 million a year ago.

Looking ahead to the 2018 full year, Amex raised its guidance. The company now expects to see EPS in the range of $7.30 to $7.40 and revenues growing 9% to 10%. There are consensus estimates calling for $7.27 in EPS on $40.3 billion in revenue for the full year.

Stephen J. Squeri, Chairman and CEO, commented:

We delivered strong results this quarter driven by higher Card Member spending, fee income and loans. Our progress reflects the four strategic imperatives that we’re focused on:

  • Expand leadership in the premium consumer space
  • Build on our strong position in commercial payments
  • Strengthen our global integrated network to provide unique value
  • Make American Express an essential part of our customers’ digital lives.

Shares of Amex closed Thursday at $102.85, with a consensus analyst price target of $114.69 and a 52-week range of $87.54 to $111.77. Following the announcement, the stock was initially up about 1% at $103.99 in the after-hours session.