American Express Company’s (NYSE: AXP), a global leader in payment cards, has surpassed its expectations in terms of earnings per share in the second quarter. This was due to a robust growth in fees and accelerated cardholder numbers. The stock fell despite this.
American Express’s Q2 earnings were $3.02billion or $3.49 (adjusted), a significant increase over the $2.17billion reported a year earlier and well above the consensus of $3.24.
The earnings report published Friday shows that the revenue increase of 8.0% to $16.3 billion, which analysts expected, fell below the $16.6 billion forecast.
The multinational saw its shares drop by 2.0% today despite having generated $15 billion of revenue during the same period last year.
Full-year revised guidance
The price movement is interesting because American Express has raised their guidance for the entire year. In 2024 the company expects earnings per share to range between $13.30 and $14.80, an increase from its previous forecast of $13.15 on the high end.
AMEX, however, left unchanged its guidance for revenue growth at 9% – 11%.
In a press release, Chief Executive Stephen J. Squeri expressed his satisfaction with the credit rating of the company and announced plans to invest in marketing by approximately 15%.
In addition, the provision for credit losses was $1.3 billion in the second quarter. This is an increase of $100 million from last year. AXP experienced higher net write offs during Q2, but a smaller reserve increase year over year.
Card market and new card purchases
American Express announced 3.3 millions new card purchases for the second quarter. Billed business increased by 5.0%.
In less than four short years, the financial giant saw a near 40% rise in spending by card members and a close to 50% increase in revenues. AXP has risen more than 100 percent since the low of early 2021.
Barclays analysts reiterated last week their “equal-weight” rating for American Express, in part due to the stock’s over 30% increase this year. Despite that, AMEX has already traded well above Barclays’ price target of 223.
Norden Group has recently purchased 1,645 American Express shares, as per its 13th July filing. AXP has announced that it acquired two companies in June: Rooam & Tock. These acquisitions are aligned with AXP’s growth strategy.
The post American Express exceeds EPS expectations and increases guidance but shares still fall could be updated as new information unfolds.
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