A month has gone by since the last earnings report for American Express (AXP Quick QuoteAXP - Free Report) . Shares have added about 7.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is American Express due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

American Express Q4 Earnings Beat on Record Card Spending

American Express reported fourth-quarter 2021 earnings of $2.18 per share, which beat the Zacks Consensus Estimate of $1.78. Also, the bottom line increased 24% year over year.

For the quarter under review, the company’s total revenues net of interest expense increased 30% year over year to $12,145 million. The top line beat the Zacks Consensus Estimate of $11,597 million.

The strong fourth-quarter 2021 results were driven by higher Card Member spending that reached record highs and growing network volumes. The results were supported by improved performance from Global Commercial Services and Global Merchant and Network Services units. Its prudent investment strategy helped it boost new Card acquisitions, increase loan balances and enhance digital engagement with clients.

Operational Performance

Thanks to higher spending, network volumes jumped 29% year over year to $368.1 billion for the fourth quarter.

Provision for credit losses amounted to $53 million against the year-ago quarter’s provision benefit of $111 million.

Total expenses of $9,786 million increased 29% year over year, primarily due to higher marketing and business development, and card member rewards. Also, higher costs from card member services, salaries and employee benefits, professional services, and data processing and equipment increased total expenses.

The credit card giant’s return on equity of 33.7% expanded 1950 basis points year over year.

Segmental Performances

Global Consumer Services Group segment recorded a pretax income of $1,301 million for the fourth quarter, which decreased 11% year over year primarily due to higher expenses. Total revenues net of interest expense increased 23% year over year to $6,949 million, courtesy of a rise in Card Member spending.

Global Commercial Services segment delivered pretax income of $706 million, which increased 6% year over year despite a 27% rise in expenses. Total revenues net of interest expense were $3,554 million, which climbed 30% year over year, attributable to higher Card Member spending.

Global Merchant and Network Services segment reported pretax net income of $508 million, which increased 84% year over year despite a 15% increase in costs. Total revenues net of interest expense increased 31% year over year to $1,454 million, primarily driven by growing network volumes.

Corporate and Other posted fourth-quarter pretax loss of $209 million, narrower than the prior-year pretax loss of $545 million due to a non-cash gain.

Consolidated pretax income for fourth-quarter 2021 was $2,306 million, up 24% from $1,858 million a year ago.

Balance Sheet (As of Dec 31, 2021)

American Express exited the fourth quarter with cash & cash equivalents of $22 billion, which decreased sequentially from $28 billion. As of Dec 31, 2021, the company’s long-term debt was $39 billion, up from $34 billion at third quarter-end.

Outlook

American Express, with its new growth plan, anticipates gaining heavily from the improving macro environment. Rising credit card spending will buoy its future performance. As such, AXP expects 2022 revenues to grow 18-20%. Yet, it expects earnings per share within $9.25-$9.65, lower than the Zacks Consensus Estimate of $9.72. In comparison, the company recorded earnings per share of $10.02 for full-year 2021.

In the long term, AXP expects to achieve revenue growth of more than 10% and earnings per share to rise in mid-teens, as the economy reaches a steady state.

The company is likely to raise its quarterly dividend for the first time since 2019. It plans to hike dividend by 20% to 52 cents per share, starting from the first quarter 2022.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, American Express has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, American Express has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.