Back to top

Analyst Blog

On May 30, we reiterated our recommendation on American Express Co. (AXP - Analyst Report) (AmEx) to Neutral based on its stable billed business trends and capital flexibility, which augur sustained growth in the future. However, higher loan loss provisions and lower ROE increase the operational risks.

Why the Retention?

Estimates for AmEx have remained steady since the company reported its first-quarter 2013 results on Apr 17. The company’s earnings of $1.15 per share exceeded the Zacks Consensus Estimate of $1.11, although revenues of $7.88 billion lagged the same benchmark by 1.4%.

However, both top and bottom line surpassed the year-ago results, based on growth in card spending, improved loan portfolio and strict expense control, which were partially offset by escalated provision for losses and tax rate.

Following the release of the first-quarter results, the Zacks Consensus Estimate for 2013 edged up 0.8% to $4.79 per share in the last 60 days. However, the Zacks Consensus Estimate for 2014 inched down 0.4% to $5.33 a share. With the Zacks Consensus Estimate for both 2013 and 2014 showing no clear directional pressure on the stock in the near term, the company now has a Zacks Rank #3 (Hold).

While intense global competition coupled with sluggish interest rate environment and currency fluctuations deter the desired upside in the stock, AmEx’s growth is sustained by its consistent credit quality and consistent focus on a diversified business mix.

Strong alliances and acquisitions also bode well for long-term growth. Moreover, the recent 15% hike in dividends and accelerated share buybacks reflect superior liquidity and raises investor confidence.

Other Financial Stocks That Warrant a Look

While we maintain a neutral stance on AmEx in the near term, other stocks in the financial sector that are outperforming include CBOE Holdings Inc. (CBOE - Analyst Report), XL Group Plc (XL - Analyst Report) and Fleetcor Tech Inc. (FLT - Snapshot Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.48 +6.16%
BITAUTO HOL… BITA 81.71 +5.12%
CHINA BIOLO… CBPO 48.00 +3.49%
CTPARTNERS… CTP 16.49 +3.19%
STRATTEC SE… STRT 73.90 +3.15%