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Will American Express (AXP) Disappoint Again in Q1 Earnings?

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American Express Inc. (AXP - Free Report) is scheduled to report first-quarter 2017 results on Apr 19, after market close.

Last quarter, American Express missed the Zacks Consensus Estimate by 7.14%. Let’s see how things are shaping up for this announcement.

Q1 Flash Back

We expect the company’s top line to see growth from its strong international business, expansion in small business, new lending products (i.e., American Express EveryDay and small business), growth of loyalty business and prepaid products, and momentum in OptBlue with small merchants.

However, the bottom line is likely to suffer from higher marketing and promotion spend that the company is undertaking in an intensively competitive environment.

Loan loss provision is likely to be higher given overall loan growth goals.

We expect to see an increase in cost of card member services as the company continues to provide premium services such as airport lounge access and co-brand benefits such as First Bag Free on Delta. The company is continuously making investments in these initiatives to drive revenue growth.

Then again, the company’s commitment to return capital to shareholders via share buyback will aid bottom line.

Earnings Whispers

Our proven model does not conclusively show that American Express is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: American Express has an Earning ESP of -1.56%. This is because the Most Accurate estimate stands at a $1.26 per share, which is below the Zacks Consensus Estimate of $1.28.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American Express carries a Zacks Rank #3 (Hold) which decreases the predictive power. We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies from the finance sector that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:  

Western Union Co. (WU - Free Report) will report first-quarter 2017 earnings results on May 2. The company has an Earnings ESP of +2.56% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moneygram International Inc. has an Earnings ESP of +20% and a Zacks Rank #2 (Buy). The company is expected to report first-quarter earnings results on May 5.

Moody’s Corporation (MCO - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank #2. The company is expected to report first-quarter earnings results on May 5.

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