Banking, finance, and taxes

What to Expect From American Express Earnings

Chris Lange

Published: July 20, 2016 10:55 am

Last Updated: January 13, 2020 5:31 am

American Express Co. (NYSE: AXP) is scheduled to release its second-quarter earnings report after the markets close on Wednesday. Considering the recent earnings wins from other major financial institutions American Express might be in line for a win as well.

The consensus estimates from Thomson Reuters call for $1.95 in earnings per share (EPS) on revenue of $8.4 billion. In the same period of last year, it posted EPS of $1.42 and $8.28 billion in revenue.

American Express could make one think that stocks in general are in a bear market. The company’s decline since the beginning of 2015 looks very much like its 2008/2009 decline. It may be having some problems, but a firm bottom looks to have been established at $50, which has been long-term major technical level since 2000.

The chances of the credit card company breaking through that level without some kind of major economic depression are incredibly low, limiting downside considerably. In general, a boom means more spending, which means more earnings for credit card companies. Even a minor recovery halfway to previous highs would translate to 15% gains in this case.

The company plans to increase its quarterly dividend by 10% to $0.32 per share and will increase its buyback up to $3.3 billion of common shares through mid-2017. Its market cap is roughly $60 billion.

A few analysts weighed in on American Express prior to the release of the earnings report:

• Credit Suisse reiterated a Sell rating.
• Nomura reiterated a Hold rating.
• Wells Fargo reiterated a Hold rating with a $65 price target.
• D.A. Davidson has a Neutral rating with a $66 price target.
• JPMorgan reiterated a Hold rating.
• Deutsche Bank reiterated a Hold rating.
• Merrill Lynch reiterated a Sell rating.
• Goldman Sachs reiterated a Neutral rating with a $67 price target.

So far in 2016, American Express has underperformed the broad markets, with the stock down about 6%. Over the past 52 weeks, the stock is actually down closer to 18%.

Shares of American Express were trading down 0.7% at $63.69 on Wednesday, with a consensus analyst price target of $67.64 and a 52-week trading range of $50.27 to $81.66.