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American Express' Upbeat Earnings Likely to Boost These ETFs
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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.
American Express last week reported stronger-than-expected third-quarter earnings and revenue, while raising its full-year forecast. 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.
Below we highlight a few ETFs that can gain from American Express’ upbeat earnings.
ETFs in Focus
Defiance Hotel Airline and Cruise ETF (CRUZ - Free Report) – Up 3.9% Last Week
The demand for travel is particularly resilient as Americans make up for postponed trips due to the pandemic. Consumers are also splurging on food and entertainment after pandemic lockdowns eased. American Express said its travel and entertainment segment saw spending skyrocket 57% from a year ago with volumes in its international markets surpassing pre-pandemic levels for the first time in the third quarter.
iShares Evolved U.S. Discretionary Spending ETF IEDI – Down 0.8% Last Week
According to Wells Fargo, consumers had accumulated as much as $2.1 trillion in excess savings during the peak of the pandemic helped by fiscal support and lack of spending options amid lockdowns. That’s a huge sum in an economy with $25 trillion in annual GDP. Though these savings are rapidly declining amid high inflation, consumers still have $1.3 trillion in extra spending power as of August, as quoted on Yahoo Finance. Both Bank of America and American Express said that U.S. consumer is braving red-hot inflation.
ALPS Global Travel Beneficiaries ETF (JRNY - Free Report) – Up 1.1% Last Week
American Express “expected the recovery in travel spending to be a tailwind for [the company], but the strength of the rebound has exceeded [management’s] expectations throughout the year,” as quoted on CNBC. The underlying S-Network Global Travel Index identifies exchange-traded stocks of companies that are materially engaged in the global travel industry.
ETFMG Prime Mobile Payments ETF (IPAY - Free Report) – Up 1.1% Last Week
“Card member spending remained at near-record levels in the quarter,” American Express CEO Stephen Squeri said Friday on an earnings call. The underlying Prime Mobile Payments Index provides a benchmark for investors interested in tracking the mobile and electronic payments industry, specifically focusing on credit card networks, payment infrastructure and software services, payment processing services, and payment solutions.
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American Express' Upbeat Earnings Likely to Boost These ETFs
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.
American Express last week reported stronger-than-expected third-quarter earnings and revenue, while raising its full-year forecast. 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.
Below we highlight a few ETFs that can gain from American Express’ upbeat earnings.
ETFs in Focus
Defiance Hotel Airline and Cruise ETF (CRUZ - Free Report) – Up 3.9% Last Week
The demand for travel is particularly resilient as Americans make up for postponed trips due to the pandemic. Consumers are also splurging on food and entertainment after pandemic lockdowns eased. American Express said its travel and entertainment segment saw spending skyrocket 57% from a year ago with volumes in its international markets surpassing pre-pandemic levels for the first time in the third quarter.
iShares Evolved U.S. Discretionary Spending ETF IEDI – Down 0.8% Last Week
According to Wells Fargo, consumers had accumulated as much as $2.1 trillion in excess savings during the peak of the pandemic helped by fiscal support and lack of spending options amid lockdowns. That’s a huge sum in an economy with $25 trillion in annual GDP. Though these savings are rapidly declining amid high inflation, consumers still have $1.3 trillion in extra spending power as of August, as quoted on Yahoo Finance. Both Bank of America and American Express said that U.S. consumer is braving red-hot inflation.
ALPS Global Travel Beneficiaries ETF (JRNY - Free Report) – Up 1.1% Last Week
American Express “expected the recovery in travel spending to be a tailwind for [the company], but the strength of the rebound has exceeded [management’s] expectations throughout the year,” as quoted on CNBC. The underlying S-Network Global Travel Index identifies exchange-traded stocks of companies that are materially engaged in the global travel industry.
ETFMG Prime Mobile Payments ETF (IPAY - Free Report) – Up 1.1% Last Week
“Card member spending remained at near-record levels in the quarter,” American Express CEO Stephen Squeri said Friday on an earnings call. The underlying Prime Mobile Payments Index provides a benchmark for investors interested in tracking the mobile and electronic payments industry, specifically focusing on credit card networks, payment infrastructure and software services, payment processing services, and payment solutions.