The earnings of American Express Company, NYSE: AXP this morning indicate that the US consumer has no intention to cut back on their spending – at least when it comes to travel and entertainment.
Even more intriguing is the fact that AMEX now generates a larger portion of its revenue from younger generations.
According to a release from the Financial Services giant on Friday, 60% of new cards were purchased by millennials and Gen Z.
The billed business, or the total amount of spending through American Express’ network, grew by a higher-than-expected 8 percent in the fourth quarter. This further undermines the narrative that high-end consumers were slowing.
American Express shares are currently about 70% higher than the starting price of 2024.
What impacted AMEX’s earnings for Q4?
UBS analyst Erica Najarian said in an interview with CNBC today that American Express’s fiscal fourth-quarter earnings per share were not able to beat the Street expectations primarily due to “more marketing spending to engage customers”.
The credit card company released better than expected guidance on Friday for revenue growth in the full year. But she believes AMEX will go beyond this if businesses start expanding and picking up their business by 2025.
The stock of American Express remains attractive, despite the massive rise in its share price last year.
AMEX’s earnings come just days after it agreed to pay the $138 million settlement to resolve a marketing and sales investigation.
American Express could make new acquisitions by 2025
Erica Najarian has high hopes for the 400 million dollar acquisition of Tock by American Express in the fourth quarter of 2017.
She expects that the company will continue to look for potential deals in 2025 to hook more clients to its ecosystem.
She did not comment on the next target of AMEX, but she said that it will pursue these types of deals in order to “keep” you and to prevent you from switching to Capital One Venture X credit cards or Chase Saphire Reserve.
American Express celebrates its 175 th Anniversary in March 2025.
American Express is a relatively cheap stock to buy
American Express’s fourth quarter financial results showed a small decline of $1.3 billion in provisions for credit loss.
The shares of this New York-based company currently sell for 23,22 times their trailing 12-month earnings, compared with 34 times the earning for Visa or more than 40 for Mastercard.
Despite its continued rally, AMEX is still not a particularly costly stock to buy at the time of writing.
The American Express share price is comfortably above its 200-day MA, and there’s a solid support level of $288 that makes it a good idea to buy them this Friday.
The post American Express Earnings Reveal US Consumer Spending and Economic Trends may be updated as new information becomes available.
