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Can American Express' (AXP) Q3 Earnings Beat on Estimates?
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American Express Company (AXP - Free Report) is set to continue its earnings beat streak in third-quarter 2022, the results of which are expected to be released on Oct 21, before the opening bell.
In the last reported quarter, the diversified financial services company’s adjusted earnings per share of $2.57 beat the Zacks Consensus Estimate by 8.4%, primarily due to continued business momentum and a solid revenue stream. American Express also benefited from better volumes and higher Card Member spending due to a significant rebound in Travel and Entertainment spending. AXP added 3.2 million proprietary cards in the quarter. However, the positives were partially offset by higher operating costs.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate of $2.38 for third-quarter earnings per share has witnessed three upward revisions and one downward movement in the past month. The estimate is indicative of a 4.9% increase from the year-ago reported figure. Our estimates suggest earnings to be $2.31 per share in the third quarter.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $13.5 billion, suggesting a jump of 23.7% from the year-ago reported figure. We expect third-quarter revenues to witness a 23.1% year-over-year increase.
American Express beat earnings estimates in each of the trailing four quarters, delivering an average surprise of 17.7%. This is depicted in the graph below.
Our proven model predicts an earnings beat for American Express this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +4.11%. The Most Accurate Estimate is pegged at $2.48 per share, higher than the Zacks Consensus Estimate of $2.38. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: American Express currently carries a Zacks Rank #3.
Factors Driving Better-Than-Expected Earnings
AmEx is likely to have witnessed improved volumes in the to-be-reported quarter, a trend seen over the last few quarters. It might have expanded, owing to total network volumes and billed business volumes. A rise in the overall spending level is likely to have boosted Discount revenues, AXP’s largest revenue driver.
The Zacks Consensus Estimate for third-quarter Discount revenues indicates 19.7% year-over-year growth. Our estimate suggests a 25.3% year-over-year increase in Discount revenues for the quarter under review.
Travel and Entertainment (T&E) is rapidly increasing in most parts of the world, overcoming the COVID-19 woes. T&E spending is expected to have increased in the third quarter of 2022. Fees, commissions and other revenues might have improved on the back of an uptick in travel-related revenues. Card acquisitions in some of AXP’s largest travel co-brand portfolios are likely to have increased.
Cards-in-force is expected to have witnessed an uptick in the quarter under review. The Zacks Consensus Estimate for third-quarter total cards-in-force signals a 10.1% year-over-year jump. Our estimate projects total cards-in-force to rise 9.3% year over year.
American Express’s net interest income, the second-largest revenue contributor, is likely to have risen on higher loan disbursements. The consensus mark for AXP’s net interest income suggests an upside of 21% from the year-ago reported figure.
We expect the figure to increase 14.1% from the year-ago period. Further, we expect Global Merchant and Network Services’ pre-tax income to have witnessed a 47% year-over-year surge.
The above-mentioned factors are likely to have set the company up for an earnings beat and year-over-year increase in the third quarter. However, the rising expenses in global commercial services, marketing and business development might have partially offset the bottom line. Our estimate suggests a 28.3% year-over-year increase in total expenses in the quarter.
Other Stocks That Warrant a Look
Here are some other companies from the broader finance space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Axos Financial’s bottom line for the to-be-reported quarter is pegged at $1.13 per share, implying a 9.7% improvement from the year-ago figure. AX beat earnings estimates in each of the past four quarters, with an average surprise of 10.1%.
Premier Financial Corp. (PFC - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Premier Financial’s bottom line for the to-be-reported quarter is pegged at 80 cents per share, implying a 5.3% improvement from the year-ago figure. The estimates remained stable over the past week.
Synchrony Financial (SYF - Free Report) has an Earnings ESP of +7.31% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Synchrony Financial’s bottom line for the to-be-reported quarter is pegged at $1.45 per share. SYF beat earnings estimates in each of the past four quarters, with an average surprise of 9.4%.
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Can American Express' (AXP) Q3 Earnings Beat on Estimates?
American Express Company (AXP - Free Report) is set to continue its earnings beat streak in third-quarter 2022, the results of which are expected to be released on Oct 21, before the opening bell.
In the last reported quarter, the diversified financial services company’s adjusted earnings per share of $2.57 beat the Zacks Consensus Estimate by 8.4%, primarily due to continued business momentum and a solid revenue stream. American Express also benefited from better volumes and higher Card Member spending due to a significant rebound in Travel and Entertainment spending. AXP added 3.2 million proprietary cards in the quarter. However, the positives were partially offset by higher operating costs.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate of $2.38 for third-quarter earnings per share has witnessed three upward revisions and one downward movement in the past month. The estimate is indicative of a 4.9% increase from the year-ago reported figure. Our estimates suggest earnings to be $2.31 per share in the third quarter.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $13.5 billion, suggesting a jump of 23.7% from the year-ago reported figure. We expect third-quarter revenues to witness a 23.1% year-over-year increase.
American Express beat earnings estimates in each of the trailing four quarters, delivering an average surprise of 17.7%. This is depicted in the graph below.
American Express Company Price and EPS Surprise
American Express Company price-eps-surprise | American Express Company Quote
What the Quantitative Model Suggests
Our proven model predicts an earnings beat for American Express this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +4.11%. The Most Accurate Estimate is pegged at $2.48 per share, higher than the Zacks Consensus Estimate of $2.38. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: American Express currently carries a Zacks Rank #3.
Factors Driving Better-Than-Expected Earnings
AmEx is likely to have witnessed improved volumes in the to-be-reported quarter, a trend seen over the last few quarters. It might have expanded, owing to total network volumes and billed business volumes. A rise in the overall spending level is likely to have boosted Discount revenues, AXP’s largest revenue driver.
The Zacks Consensus Estimate for third-quarter Discount revenues indicates 19.7% year-over-year growth. Our estimate suggests a 25.3% year-over-year increase in Discount revenues for the quarter under review.
Travel and Entertainment (T&E) is rapidly increasing in most parts of the world, overcoming the COVID-19 woes. T&E spending is expected to have increased in the third quarter of 2022. Fees, commissions and other revenues might have improved on the back of an uptick in travel-related revenues. Card acquisitions in some of AXP’s largest travel co-brand portfolios are likely to have increased.
Cards-in-force is expected to have witnessed an uptick in the quarter under review. The Zacks Consensus Estimate for third-quarter total cards-in-force signals a 10.1% year-over-year jump. Our estimate projects total cards-in-force to rise 9.3% year over year.
American Express’s net interest income, the second-largest revenue contributor, is likely to have risen on higher loan disbursements. The consensus mark for AXP’s net interest income suggests an upside of 21% from the year-ago reported figure.
We expect the figure to increase 14.1% from the year-ago period. Further, we expect Global Merchant and Network Services’ pre-tax income to have witnessed a 47% year-over-year surge.
The above-mentioned factors are likely to have set the company up for an earnings beat and year-over-year increase in the third quarter. However, the rising expenses in global commercial services, marketing and business development might have partially offset the bottom line. Our estimate suggests a 28.3% year-over-year increase in total expenses in the quarter.
Other Stocks That Warrant a Look
Here are some other companies from the broader finance space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
Axos Financial, Inc. (AX - Free Report) has an Earnings ESP of +4.06% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Axos Financial’s bottom line for the to-be-reported quarter is pegged at $1.13 per share, implying a 9.7% improvement from the year-ago figure. AX beat earnings estimates in each of the past four quarters, with an average surprise of 10.1%.
Premier Financial Corp. (PFC - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Premier Financial’s bottom line for the to-be-reported quarter is pegged at 80 cents per share, implying a 5.3% improvement from the year-ago figure. The estimates remained stable over the past week.
Synchrony Financial (SYF - Free Report) has an Earnings ESP of +7.31% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Synchrony Financial’s bottom line for the to-be-reported quarter is pegged at $1.45 per share. SYF beat earnings estimates in each of the past four quarters, with an average surprise of 9.4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.