Why Is American Express (AXP) Up 1.4% Since Last Earnings Report?

A month has gone by since the last earnings report for American Express (AXP). Shares have added about 1.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is American Express due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

American Express Q3 Earnings & Revenues Beat Estimates

American Express Co. third-quarter 2019 earnings of $2.08 per share surpassed the Zacks Consensus Estimate by 0.4% and were up 10.7% year over year.

Total revenues of $11 billion beat the Zacks Consensus Estimate by 0.35% and were up 8% year over year.  This is the ninth straight quarter in which the company posted foreign exchange adjusted revenue growth of at least 8%. Earnings growth was driven by higher Card Member spending, net interest income and card fees.

Provisions for loss totaled $879 million, up 8% year over year, due to slightly higher net write-offs and delinquencies.

Total expenses of $7.8 billion increased 9% year over year, due to growth in rewards and other customer engagement costs driven by increased Card Member spending and continued investments in co-brand partnerships.

Segment Update
 
American Express’ Global Consumer Services segment reported net income of $857 million, up 10% year over year. Total revenues and net of interest expenses of $6 billion, were up 11% year over year, reflecting card fees and Card Member spending.

Global Commercial Services’ net income of $629 million was up 4% year over year. Total revenues and net of interest expenses increased 7% year over year to $3.4 billion, primarily reflecting higher Card Member spending.

Global Merchant and Network Services’ net income rose 3% year over year to $600 million in the reported quarter. Total revenues and net of interest expenses were up 5% year over year to $1.7 billion.

Dividend and Share Buyback Update

During the quarter, the company hiked its quarterly dividend by 10% to 43 cents a share. It also announced a stock buyback of up to 120 million common shares over time or roughly 14% of the total.
Guidance Update

American Express has reaffirmed its financial guidance for 2019. The company expects revenue growth of 8–10% in 2019. In addition, its adjusted EPS guidance range for the same year is $7.85–$8.35.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, American Express has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

American Express has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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