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American Express Company (AXP - Free Report) reported second-quarter 2018 adjusted earnings per share of $1.84, beating the Zacks Consensus Estimate by 0.55%. Moreover, the bottom line witnessed a 25% year-over-year improvement.
Better-than-expected results were mainly backed by higher spending by consumer, small business, and corporate Card Members. This was, however, partially offset by increase in cost of rewards.
American Express Company Price, Consensus and EPS Surprise
Revenues came in at $10 billion, 0.5% below of the Zacks Consensus Estimate of $10.05 billion. The top line increased 9% year over year, driven by higher loan volumes and increase in Card Member spending and fees.
Provisions for loss totaled $806 million, up 38% year over year, which is attributable to growth in the loan and charge portfolio and an increase in higher write-offs.
Total expenses of $7.1 billion increased 7% year over year due to higher rewards expenses incurred and costs associated with marketing and business development.
The effective tax rate declined to 22% from 31% in the year-ago quarter, courtesy of the tax reform.
Strong Segment Results
American Express’ Global Consumer Services segment reported net income of $770 million, up 25% year over year. Total revenues, net of interest expense of $5.3 billion, were up 12% year over year, reflecting higher loans and Card Member spending as well as fee income.
Global Commercial Services’ net income of $564 million was up 18% year over year. Total revenues, net of interest expenses, increased 8% year over year to $3.2 billion, primarily reflecting higher Card Member spending.
Global Merchant and Network Services’ net income rose 14% year over year to $543 million in the reported quarter. Total revenues, net of interest expenses, inched up 1% year over year to $1.6 billion on higher Card Member spending, partially offset by an expected decrease in the average discount rate and lower revenues from network partners.
Corporate and Other reported net loss of $254 million, wider than $224 million loss incurred in the year-ago quarter.
2018 Guidance Update
The company retained its 2018 earnings per share guidance on the high end of the $6.90-$7.30 range, which it had issued in the first quarter.
Revenue growth estimates were, however, pulled up. The company now expects the same to grow at least 9% compared with the earlier estimate of at least 8% growth.
Zacks Rank
American Express carries a Zacks Rank #3 (Hold).
Upcoming Releases
Here are some companies poised to beat on earnings this quarter owing to a strong Zacks Rank as well as a positive Earnings ESP.
Mastercard Incorporated (MA - Free Report) is expected to report second-quarter earnings on Jul 26. This Zacks #3 Ranked stock has an Earnings ESP of +0.31%.
Visa Inc. (V - Free Report) is expected to report third-quarter fiscal 2018 earnings on Jul 25. This Zacks #3 Ranked stock has an Earnings ESP of +0.30%.
Global Payments Inc. (GPN - Free Report) is expected to report second-quarter earnings on Aug 2. This Zacks #3 Ranked stock has an Earnings ESP of +0.15%.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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AmEx (AXP) Q2 Earnings Beat, Revenues Miss, Guidance Intact
American Express Company (AXP - Free Report) reported second-quarter 2018 adjusted earnings per share of $1.84, beating the Zacks Consensus Estimate by 0.55%. Moreover, the bottom line witnessed a 25% year-over-year improvement.
Better-than-expected results were mainly backed by higher spending by consumer, small business, and corporate Card Members. This was, however, partially offset by increase in cost of rewards.
American Express Company Price, Consensus and EPS Surprise
American Express Company Price, Consensus and EPS Surprise | American Express Company Quote
Delving Deeper
Revenues came in at $10 billion, 0.5% below of the Zacks Consensus Estimate of $10.05 billion. The top line increased 9% year over year, driven by higher loan volumes and increase in Card Member spending and fees.
Provisions for loss totaled $806 million, up 38% year over year, which is attributable to growth in the loan and charge portfolio and an increase in higher write-offs.
Total expenses of $7.1 billion increased 7% year over year due to higher rewards expenses incurred and costs associated with marketing and business development.
The effective tax rate declined to 22% from 31% in the year-ago quarter, courtesy of the tax reform.
Strong Segment Results
American Express’ Global Consumer Services segment reported net income of $770 million, up 25% year over year. Total revenues, net of interest expense of $5.3 billion, were up 12% year over year, reflecting higher loans and Card Member spending as well as fee income.
Global Commercial Services’ net income of $564 million was up 18% year over year. Total revenues, net of interest expenses, increased 8% year over year to $3.2 billion, primarily reflecting higher Card Member spending.
Global Merchant and Network Services’ net income rose 14% year over year to $543 million in the reported quarter. Total revenues, net of interest expenses, inched up 1% year over year to $1.6 billion on higher Card Member spending, partially offset by an expected decrease in the average discount rate and lower revenues from network partners.
Corporate and Other reported net loss of $254 million, wider than $224 million loss incurred in the year-ago quarter.
2018 Guidance Update
The company retained its 2018 earnings per share guidance on the high end of the $6.90-$7.30 range, which it had issued in the first quarter.
Revenue growth estimates were, however, pulled up. The company now expects the same to grow at least 9% compared with the earlier estimate of at least 8% growth.
Zacks Rank
American Express carries a Zacks Rank #3 (Hold).
Upcoming Releases
Here are some companies poised to beat on earnings this quarter owing to a strong Zacks Rank as well as a positive Earnings ESP.
Mastercard Incorporated (MA - Free Report) is expected to report second-quarter earnings on Jul 26. This Zacks #3 Ranked stock has an Earnings ESP of +0.31%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Visa Inc. (V - Free Report) is expected to report third-quarter fiscal 2018 earnings on Jul 25. This Zacks #3 Ranked stock has an Earnings ESP of +0.30%.
Global Payments Inc. (GPN - Free Report) is expected to report second-quarter earnings on Aug 2. This Zacks #3 Ranked stock has an Earnings ESP of +0.15%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>