American Express (AXP) to Post Q4 Earnings: What's in Store?

American Express Co. AXP is set to release fourth-quarter and 2019 earnings on Jan 24, before market open.

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $2, indicating an increase of 14.94% year over year. The consensus mark for revenues is pegged at $11.38 billion, suggesting a rise of 8.61%.

Key Factors to Note

The quarter under review is likely to have experienced solid billings growth, one of the key revenue drivers for the company, owing to strong consumer spending in the United States. Also, increased spending of small and medium international enterprises is expected to have driven billings growth.

Revenues are likely to have benefited from card fees as the company is experiencing rising number of customers coming from fee-based products, owing to refreshed products introduced recently.

Card Member services costs are likely to have increased in the to-be-reported quarter. The company expects this to be its fastest growing expense category, as it includes the cost of the differentiated value propositions such as airport lounge access and other travel benefits. These benefits are difficult for competitors to replicate and help the company to earn strong revenues from its fee-based products

Earnings per share are likely to have been supported by a reduction in share count, owing to the company’s continued prudent management of capital by way of share repurchases.

Company’s Guidance

For 2019, the company expects earnings of $7.85 to $8.35.

Earnings Surprise History

The company beat estimates in three of the last four quarters, the surprise being negative 0.34%, on average. This is depicted in the chart below:

American Express Company Price and EPS Surprise

 

American Express Company Price and EPS Surprise

American Express Company price-eps-surprise | American Express Company Quote

What Our Model Says

Our proven model does not predict an earnings beat for American Express this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: American Express has an Earnings ESP of -0.30% as the Zacks Consensus Estimate is pegged at $2 per share and the Most Accurate Estimate stands at $1.99 per share.

Zacks Rank: American Express has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

Here are some companies in the financial transaction services sector that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Global Payments Inc. GPN has an Earnings ESP of +3.15% and a Zacks Rank #2.

Fidelity National Information Services, Inc. FIS has an Earnings ESP of +0.45% and a Zacks Rank of 2

Square, Inc. SQ has an Earnings ESP of +6.14% and a Zacks Rank #3.

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