We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
American Express' (AXP) Q3 Earnings Beat on Travel Spending
Read MoreHide Full Article
American Express Company (AXP - Free Report) reported its third-quarter 2022 earnings of $2.47 per share, beating the Zacks Consensus Estimate of $2.42. The bottom line also increased 9% year over year.
For the quarter under review, AXP’s total revenues net of interest expense increased 24% year over year to $13,556 million. The top line beat the Zacks Consensus Estimate of $13,515 million and our estimate of $13,454.1 million.
The strong third-quarter 2022 results gained from continued business momentum and a solid revenue stream. American Express also benefited from better volumes and higher Card Member spending, due to a significant increase in Travel and Entertainment spending. AXP added 3.3 million proprietary cards in the quarter. However, the positives were partially offset by higher operating costs.
American Express Company Price, Consensus and EPS Surprise
Due to higher spending, network volumes jumped 19% year over year to $394.4 billion in the third quarter. Total interest income was $3,374 million in the third quarter, up 47% year over year. Provision for credit losses amounted to $778 million compared with the year-ago quarter’s provision benefit of $191 million. Setting aside such a huge amount is expected to help the company navigate through a volatile global economy.
Total expenses of $10,319 million increased 19% year over year, primarily due to higher customer engagement costs, net gains on Amex Ventures equity investments in the prior year and higher compensation expenses in the current quarter.
Segmental Performances
The U.S. Consumer Services segment recorded a pretax income of $1,309 million for the third quarter, witnessing an increase from $1,251 million a year ago. Total revenues net of interest expense increased to $6,210 million from $4,896 million in the prior-year period, courtesy of a rise in Card Member spending.
The Commercial Services segment delivered a pretax income of $774 million, which increased from $699 million a year ago. Total revenues net of interest expense were $3,496 million, which climbed from $2,842 million, attributable to higher Card Member spending.
The International Card Services segment recorded a pretax income of $166 million for the third quarter, decreasing from $269 million a year ago, due to the strengthening of the U.S. dollar. Total revenues net of interest expense increased to $2,252 million from $1,896 million in the prior-year period, driven by a rise in Card Member spending and higher revenues from foreign exchange conversion fees.
The Global Merchant and Network Services segment reported a pre-tax net income of $792 million, which increased from $513 million in the third quarter of 2021. Total revenues net of interest expense increased to $1,665 million from the year-ago figure of $1,322 million, primarily driven by growing network volumes.
Corporate and Other posted a third-quarter pretax loss of $582 million, which deteriorated from the prior-year pretax loss of $282 million, due to net gains on Amex Ventures equity investments in the year-ago period.
Balance Sheet (as of Sep 30, 2022)
American Express exited the third quarter with cash & cash equivalents of $31 billion, which increased sequentially from $26 billion. Total assets rose sequentially from $205 million to $215 million.
As of Sep 30, 2022, AXP’s long-term debt was $42 billion, up from $40 billion at the second-quarter end. It also had a short-term borrowing of $2 billion.
Guidance
American Express reiterated its revenue growth guidance in the range of 23-25% and expects earnings per share to be above its guidance of $9.25-$9.65. However, it is building greater provisions, preparing for any potential defaults. The earnings estimate is lower than the consensus mark of $9.89 per share.
Headquartered in Las Vegas, NV, Axos Financial is a consumer and business banking products provider. The Zacks Consensus Estimate for AX’s current year bottom line indicates a 10.4% increase from the prior-year reported number.
Based in Boca Raton, FL, FlexShopper is a leading e-commerce marketplace operator. The Zacks Consensus Estimate for FPAY’s 2022 earnings is pegged at 70 cents per share, signaling a massive jump from 4 cents a year ago.
New York-based Owl Rock Capital works as a business development company. The Zacks Consensus Estimate for ORCC’s 2022 bottom line indicates 6.4% year-over-year growth.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
American Express' (AXP) Q3 Earnings Beat on Travel Spending
American Express Company (AXP - Free Report) reported its third-quarter 2022 earnings of $2.47 per share, beating the Zacks Consensus Estimate of $2.42. The bottom line also increased 9% year over year.
For the quarter under review, AXP’s total revenues net of interest expense increased 24% year over year to $13,556 million. The top line beat the Zacks Consensus Estimate of $13,515 million and our estimate of $13,454.1 million.
The strong third-quarter 2022 results gained from continued business momentum and a solid revenue stream. American Express also benefited from better volumes and higher Card Member spending, due to a significant increase in Travel and Entertainment spending. AXP added 3.3 million proprietary cards in the quarter. However, the positives were partially offset by higher operating costs.
American Express Company Price, Consensus and EPS Surprise
American Express Company price-consensus-eps-surprise-chart | American Express Company Quote
Q3 Operational Performance
Due to higher spending, network volumes jumped 19% year over year to $394.4 billion in the third quarter. Total interest income was $3,374 million in the third quarter, up 47% year over year. Provision for credit losses amounted to $778 million compared with the year-ago quarter’s provision benefit of $191 million. Setting aside such a huge amount is expected to help the company navigate through a volatile global economy.
Total expenses of $10,319 million increased 19% year over year, primarily due to higher customer engagement costs, net gains on Amex Ventures equity investments in the prior year and higher compensation expenses in the current quarter.
Segmental Performances
The U.S. Consumer Services segment recorded a pretax income of $1,309 million for the third quarter, witnessing an increase from $1,251 million a year ago. Total revenues net of interest expense increased to $6,210 million from $4,896 million in the prior-year period, courtesy of a rise in Card Member spending.
The Commercial Services segment delivered a pretax income of $774 million, which increased from $699 million a year ago. Total revenues net of interest expense were $3,496 million, which climbed from $2,842 million, attributable to higher Card Member spending.
The International Card Services segment recorded a pretax income of $166 million for the third quarter, decreasing from $269 million a year ago, due to the strengthening of the U.S. dollar. Total revenues net of interest expense increased to $2,252 million from $1,896 million in the prior-year period, driven by a rise in Card Member spending and higher revenues from foreign exchange conversion fees.
The Global Merchant and Network Services segment reported a pre-tax net income of $792 million, which increased from $513 million in the third quarter of 2021. Total revenues net of interest expense increased to $1,665 million from the year-ago figure of $1,322 million, primarily driven by growing network volumes.
Corporate and Other posted a third-quarter pretax loss of $582 million, which deteriorated from the prior-year pretax loss of $282 million, due to net gains on Amex Ventures equity investments in the year-ago period.
Balance Sheet (as of Sep 30, 2022)
American Express exited the third quarter with cash & cash equivalents of $31 billion, which increased sequentially from $26 billion. Total assets rose sequentially from $205 million to $215 million.
As of Sep 30, 2022, AXP’s long-term debt was $42 billion, up from $40 billion at the second-quarter end. It also had a short-term borrowing of $2 billion.
Guidance
American Express reiterated its revenue growth guidance in the range of 23-25% and expects earnings per share to be above its guidance of $9.25-$9.65. However, it is building greater provisions, preparing for any potential defaults. The earnings estimate is lower than the consensus mark of $9.89 per share.
Zacks Rank & Key Picks
American Express currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader finance space are Axos Financial, Inc. (AX - Free Report) , FlexShopper, Inc. (FPAY - Free Report) and Owl Rock Capital Corporation , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Las Vegas, NV, Axos Financial is a consumer and business banking products provider. The Zacks Consensus Estimate for AX’s current year bottom line indicates a 10.4% increase from the prior-year reported number.
Based in Boca Raton, FL, FlexShopper is a leading e-commerce marketplace operator. The Zacks Consensus Estimate for FPAY’s 2022 earnings is pegged at 70 cents per share, signaling a massive jump from 4 cents a year ago.
New York-based Owl Rock Capital works as a business development company. The Zacks Consensus Estimate for ORCC’s 2022 bottom line indicates 6.4% year-over-year growth.