American Express Better Than Worst Case (AXP)

American Express Company (NYSE: AXP) has posted earnings of $0.72 EPS from continuing operations on revenues of $7.364 Billion net of interest expense.  We had already been warned that this quarter was going to be a miserable one.  First Call has estimates pegged at $0.71 EPS and $7.85 billion in revenues. 

Analysts have a price target on American Express  with an average of $56.15.  Even after the company already signaled much of the quarter, options traders appear to be braced for a move of $2.50 in either direction.  This chart has been an ugly one but at least has bounced since the FOMC made its emergency intervention last week.  The 52-week trading range is $41.15 to $65.89, and the pattern over the last 5-days has been in a $44 to $48 trading range.

U.S. Card Services net income of $7 million was down from $473 million, principally attributed to rising credit costs and the increased expense related to Membership Rewards.  International Card Services reported a fourth-quarter net loss of $68 million, compared with net income of $99 million a year ago.  Global Commercial Services reported fourth-quarter net income of $110 million, down from $117 million a year ago.  Global Network & Merchant Services reported fourth-quarter net income of $254 million, up 26 percent from $201 million a year ago.  Corporate and Other reported fourth-quarter net income of $536 million, compared with net income of $5 million a year ago, with the increase primarily due to the previously mentioned $700 million after-tax gain from the company’s settlement agreement with Visa.

American Express shares closed up some 4.3% at $47.40 in normal trading today, and shares appear to be giving back about 2% down to $46.40 in after-hours trading.

Jon C. Ogg
January 28, 2008