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Now that we’re in the middle of the 2022 Q1 earnings season, there is a vast sea of companies reporting quarterly results each day. Q1 comes at a critical time; investors are unsure of which direction the market wants to take as we sit in one of the most unique economic environments in recent history.
Supply-chain bottlenecks, surging energy prices, and other economic restraints have spoiled the fun throughout the quarter. Investors are highly concerned regarding how companies have faced this adverse environment.
On deck to report this Friday before the market opens is American Express (AXP - Free Report) . American Express is a leading issuer of personal, small business, and corporate credit cards. The company's travel-related offerings include traveler's checks, credit cards, corporate and personal travel planning services, tour packages, and agencies for hotel and car-rental reservations.
Year-to-date, AXP shares have displayed stellar strength, increasing nearly 17% in value and easily outpacing the S&P 500’s decline of almost 6%. Needless to say, AXP has been a bright spot in a dim market. Let’s take a dive into the Q1 forecast and analyze what could be coming for American Express.
Image Source: Zacks Investment Research
Key Metrics
A vital metric for American Express is discount revenue. Discount revenue represents the money earned from fees charged to merchants with whom the company has entered into a card acceptance agreement for processing cardmember transactions.
Looking at the data, growth in this metric has been solid over the last four quarters. In its Q4 report, AXP raked in nearly $7.5 billion in discount revenue, a quarter-over-quarter increase of a strong 12%. Additionally, discount revenue grew by an impressive 35% year-over-year from 2020 to 2021. For 2022, the high estimate for annual discount revenue currently sits at $31 billion.
Another critical source of revenue for American Express is interest income. This metric has displayed solid growth over the last four quarters, similar to discount revenue. In Q4 2021, total interest income for the company tallied $2.4 billion, a 4.3% quarter-over-quarter increase. However, when looking at year-over-year percentages, interest income for AXP shrunk by 10% from 2020 to 2021. Heading into Q1, an improved economy and higher consumer spending levels will likely push this metric higher.
The last key metric that investors should be aware of heading into Q1 is network volumes. Essentially, this metric tells us how much consumers are using their cards. In Q4, AXP reported total network and processed volumes of $368.1 billion, a sizable 11.3% quarter-over-quarter increase. Year-over-year, the metric shot up 24%, also boding well for the company’s health. Additionally, total basic cards-in-force grew to 100.7 million in 2021, a 10% year-over-year increase from 2020.
Previous Earnings Results
In its latest quarter, AXP crushed the $1.78 per share earnings estimate by nearly 23% and reported quarterly earnings of $2.18 per share. The company has beat earnings expectations each of its last four quarters, acquiring a four-quarter trailing average EPS surprise of a considerable 46%.
American Express - EPS Surprise
Image Source: Zacks Investment Research
Dating back to July 2021, American Express has beaten sales estimates in three straight quarters by at least 3.5%. Additionally, in 2021 Q4, the company raked in $12.2 billion, easily beating the $11.6 billion estimate by nearly 5%.
Q1 EPS & Revenue Estimates
Let’s take a look at what analysts are forecasting for American Express in Q1 and FY22.
The Q1 Zacks Consensus Estimate currently sits at $2.43 per share, reflecting a year-over-year decrease in earnings of nearly 12%. Over the last 60 days, the Q1 EPS estimate has inched up 0.8% with the help of three positive estimate revisions. Furthermore, the Consensus Estimate Trend for the current year has crept up 0.2% to $9.74 per share, reflecting a year-over-year decrease in earnings of 2.8%.
Image Source: Zacks Investment Research
The Zacks Consensus Sales Estimate for Q1 sits at $11.7 billion, representing a sizable 30% expansion in the top line from 2021 Q1. Full-year sales for 2022 are also looking robust; the $50.4 billion Zacks Consensus Sales Estimate displays a notable 19% year-over-year increase from FY21.
American Express Quarterly Revenue
Image Source: Zacks Investment Research
Visa
Let’s pivot away from AXP and look at one of its peers, Visa, Inc. (V - Free Report) . Visa is a global payment technology company that connects consumers, businesses, banks, and governments, enabling them to use digital currency instead of cash and checks.
Over its last four quarters, Visa has an average EPS surprise just under 9%, and in its latest report, Visa beat the $1.69 per share estimate by 7% and reported quarterly EPS of $1.81. Over the last 60 days, six analysts have downwardly revised their Q1 EPS estimates; the Q1 EPS estimate for V now sits at $1.65 per share. Additionally, analysts are forecasting a 20% year-over-year growth in earnings for the current year. Visa is a Zacks Rank #3 (Hold) with an overall VGM Score of a C.
In 2021, AXP’s investment strategy enabled the company to reach record levels of Card Member spending, maintain customer retention and satisfaction above pre-COVID levels, increase new card acquisitions, grow loan balances, and deepen its digital engagement with customers. Additionally, American Express plans to expand its quarterly dividend on common shares outstanding by approximately 20%, from 0.43 cents to 0.52 cents beginning in 2022 Q1.
“As we look ahead, we are raising our aspiration to generate sustainable revenue and earnings growth over the long term with a new growth plan that will enable us to continue investing at high levels in our customers, brand, and talent. Our performance to date and the lessons we have learned have strengthened our conviction in this strategy,” says Stephen J. Squeri, Chairman and CEO, in the 2021 Q4 earnings release.
Overall, critical metrics for AXP have displayed solid quarter-over-quarter growth rates, but Q1 EPS estimates reflect a sizable decrease in earnings from 2022 Q1. Additionally, full-year earnings for 2022 are expected to shrink by a small percentage.
Revenue estimates are looking solid, and the company has provided uplifting guidance moving forward. Investors should always heed caution heading into an earnings release, especially one where quarterly EPS is forecasted to shrink by double-digits year-over-year. AXP is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a B.
American Express Company Price, Consensus and EPS Surprise
Image: Bigstock
What's In The Cards For American Express' Q1?
Now that we’re in the middle of the 2022 Q1 earnings season, there is a vast sea of companies reporting quarterly results each day. Q1 comes at a critical time; investors are unsure of which direction the market wants to take as we sit in one of the most unique economic environments in recent history.
Supply-chain bottlenecks, surging energy prices, and other economic restraints have spoiled the fun throughout the quarter. Investors are highly concerned regarding how companies have faced this adverse environment.
On deck to report this Friday before the market opens is American Express (AXP - Free Report) . American Express is a leading issuer of personal, small business, and corporate credit cards. The company's travel-related offerings include traveler's checks, credit cards, corporate and personal travel planning services, tour packages, and agencies for hotel and car-rental reservations.
Year-to-date, AXP shares have displayed stellar strength, increasing nearly 17% in value and easily outpacing the S&P 500’s decline of almost 6%. Needless to say, AXP has been a bright spot in a dim market. Let’s take a dive into the Q1 forecast and analyze what could be coming for American Express.
Image Source: Zacks Investment Research
Key Metrics
A vital metric for American Express is discount revenue. Discount revenue represents the money earned from fees charged to merchants with whom the company has entered into a card acceptance agreement for processing cardmember transactions.
Looking at the data, growth in this metric has been solid over the last four quarters. In its Q4 report, AXP raked in nearly $7.5 billion in discount revenue, a quarter-over-quarter increase of a strong 12%. Additionally, discount revenue grew by an impressive 35% year-over-year from 2020 to 2021. For 2022, the high estimate for annual discount revenue currently sits at $31 billion.
Another critical source of revenue for American Express is interest income. This metric has displayed solid growth over the last four quarters, similar to discount revenue. In Q4 2021, total interest income for the company tallied $2.4 billion, a 4.3% quarter-over-quarter increase. However, when looking at year-over-year percentages, interest income for AXP shrunk by 10% from 2020 to 2021. Heading into Q1, an improved economy and higher consumer spending levels will likely push this metric higher.
The last key metric that investors should be aware of heading into Q1 is network volumes. Essentially, this metric tells us how much consumers are using their cards. In Q4, AXP reported total network and processed volumes of $368.1 billion, a sizable 11.3% quarter-over-quarter increase. Year-over-year, the metric shot up 24%, also boding well for the company’s health. Additionally, total basic cards-in-force grew to 100.7 million in 2021, a 10% year-over-year increase from 2020.
Previous Earnings Results
In its latest quarter, AXP crushed the $1.78 per share earnings estimate by nearly 23% and reported quarterly earnings of $2.18 per share. The company has beat earnings expectations each of its last four quarters, acquiring a four-quarter trailing average EPS surprise of a considerable 46%.
American Express - EPS Surprise
Image Source: Zacks Investment Research
Dating back to July 2021, American Express has beaten sales estimates in three straight quarters by at least 3.5%. Additionally, in 2021 Q4, the company raked in $12.2 billion, easily beating the $11.6 billion estimate by nearly 5%.
Q1 EPS & Revenue Estimates
Let’s take a look at what analysts are forecasting for American Express in Q1 and FY22.
The Q1 Zacks Consensus Estimate currently sits at $2.43 per share, reflecting a year-over-year decrease in earnings of nearly 12%. Over the last 60 days, the Q1 EPS estimate has inched up 0.8% with the help of three positive estimate revisions. Furthermore, the Consensus Estimate Trend for the current year has crept up 0.2% to $9.74 per share, reflecting a year-over-year decrease in earnings of 2.8%.
Image Source: Zacks Investment Research
The Zacks Consensus Sales Estimate for Q1 sits at $11.7 billion, representing a sizable 30% expansion in the top line from 2021 Q1. Full-year sales for 2022 are also looking robust; the $50.4 billion Zacks Consensus Sales Estimate displays a notable 19% year-over-year increase from FY21.
American Express Quarterly Revenue
Image Source: Zacks Investment Research
Visa
Let’s pivot away from AXP and look at one of its peers, Visa, Inc. (V - Free Report) . Visa is a global payment technology company that connects consumers, businesses, banks, and governments, enabling them to use digital currency instead of cash and checks.
Over its last four quarters, Visa has an average EPS surprise just under 9%, and in its latest report, Visa beat the $1.69 per share estimate by 7% and reported quarterly EPS of $1.81. Over the last 60 days, six analysts have downwardly revised their Q1 EPS estimates; the Q1 EPS estimate for V now sits at $1.65 per share. Additionally, analysts are forecasting a 20% year-over-year growth in earnings for the current year. Visa is a Zacks Rank #3 (Hold) with an overall VGM Score of a C.
Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote
Bottom Line
In 2021, AXP’s investment strategy enabled the company to reach record levels of Card Member spending, maintain customer retention and satisfaction above pre-COVID levels, increase new card acquisitions, grow loan balances, and deepen its digital engagement with customers. Additionally, American Express plans to expand its quarterly dividend on common shares outstanding by approximately 20%, from 0.43 cents to 0.52 cents beginning in 2022 Q1.
“As we look ahead, we are raising our aspiration to generate sustainable revenue and earnings growth over the long term with a new growth plan that will enable us to continue investing at high levels in our customers, brand, and talent. Our performance to date and the lessons we have learned have strengthened our conviction in this strategy,” says Stephen J. Squeri, Chairman and CEO, in the 2021 Q4 earnings release.
Overall, critical metrics for AXP have displayed solid quarter-over-quarter growth rates, but Q1 EPS estimates reflect a sizable decrease in earnings from 2022 Q1. Additionally, full-year earnings for 2022 are expected to shrink by a small percentage.
Revenue estimates are looking solid, and the company has provided uplifting guidance moving forward. Investors should always heed caution heading into an earnings release, especially one where quarterly EPS is forecasted to shrink by double-digits year-over-year. AXP is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a B.
American Express Company Price, Consensus and EPS Surprise
American Express Company price-consensus-eps-surprise-chart | American Express Company Quote