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Should You Hold On to AmEx (AXP) Stock in Your Portfolio?
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American Express Company (AXP - Free Report) remains well-poised for growth due to improved discount revenues, innovative card offerings, an advanced digital solutions suite and a strong financial position.
Zacks Rank & Price Performance
American Express carries a Zacks Rank #3 (Hold) at present.
The stock has gained 6.2% in the past six months against the industry’s 5% decline. The Finance sector rose 2.5% but the S&P 500 composite index dipped 1% in the same time frame.
Image Source: Zacks Investment Research
Favorable Style Score
AXP is positioned well for progress, evident by its VGM Score of A. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three factors.
Positive Estimate Revision
The Zacks Consensus Estimate for 2022 earnings has moved 0.5% north in the past 30 days.
Impressive Earnings Surprise History
American Express’ earnings beat estimates in each of the trailing four quarters, the average being 11.33%.
Solid Return on Equity
The return in equity of AXP was at 33.3% as of Sep 30, 2022, way higher than the industry figure of 19.9%. This reflects its efficiency in utilizing shareholders’ funds.
Business Tailwinds
Discount revenues of American Express, which account for a major chunk of its top line, are expected to grow on the back of improved network volumes. Its network volumes continue to be driven by the global economic recovery from the adverse impacts of the COVID- pandemic, which signals the scope for better Card Member spending.
Further, AXP’s discount revenues also benefit from growing travel and entertainment (T&E)-related volumes. Increased confidence in traveling due to the easing of the pandemic-linked restrictions will continue providing an impetus to the T&E-related volumes in the days ahead.
For 2022, American Express expects revenue growth in the range of 23-25%. The top line witnessed 17% year-over-year growth in 2021. Management anticipates the bottom line to cross its initial 2022 earnings per share guidance of $9.25-$9.65 this year.
The company continues to roll out innovative card offerings and upgrade the existing ones with benefits, marking its continuous efforts to invest in customer acquisition, engagement and retention initiatives.
In an evolving digital era, AXP has put its best foot forward to build an advanced digital solutions suite. This, in turn, continues to play a vital role in bolstering the customer base of American Express.
Simultaneously, with the launch of digital payment solutions, AXP also has effective fraud prevention services in place that have been developed with the help of partnerships and investments. In December 2022, it launched Amex Business Link to enable its network participants to extend seamless business-to-business (B2B) payments to their business clients, thus saving time and costs.
A strong financial position backed by growing cash reserves and robust cash-generating abilities has paved the way for American Express to undertake significant business investments and tactically deploy capital either through share buybacks or dividend payments.
Stocks to Consider
Some better-ranked stocks in the Finance space are Amalgamated Financial Corp. (AMAL - Free Report) , Community West Bancshares (CWBC - Free Report) and Fulton Financial Corporation (FULT - Free Report) . While Amalgamated Financial sports a Zacks Rank #1 (Strong Buy), Community West Bancshares and Fulton Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amalgamated Financial’s earnings surpassed estimates in each of the trailing four quarters, the average being 19.41%. The Zacks Consensus Estimate for AMAL’s 2022 earnings suggests an improvement of 51.2%, while the same for revenues suggests growth of 31.3% from the corresponding year-ago reported figures. The consensus mark for AMAL’s 2022 earnings has moved 4.8% north in the past 60 days.
The bottom line of Community West Bancshares beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 8.19%. The Zacks Consensus Estimate for CWBC’s 2022 earnings suggests an improvement of 0.7%, while the same for revenues suggests growth of 7.3% from the corresponding year-ago reported figures. The consensus mark for CWBC’s 2022 earnings has moved 7.9% north in the past 30 days.
Fulton Financial’s earnings outpaced estimates in three of the last four quarters and met the mark once, the average surprise being 11.13%. The Zacks Consensus Estimate for FULT’s 2022 earnings suggests an improvement of 10.5%, while the same for revenues suggests growth of 7.8% from the corresponding year-ago reported figures. The consensus mark for FULT’s 2022 earnings has moved 1.1% north in the past 60 days.
Shares of Amalgamated Financial, Community West Bancshares and Fulton Financial have gained 13.2%, 5.7% and 17%, respectively, in the past six months.
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Should You Hold On to AmEx (AXP) Stock in Your Portfolio?
American Express Company (AXP - Free Report) remains well-poised for growth due to improved discount revenues, innovative card offerings, an advanced digital solutions suite and a strong financial position.
Zacks Rank & Price Performance
American Express carries a Zacks Rank #3 (Hold) at present.
The stock has gained 6.2% in the past six months against the industry’s 5% decline. The Finance sector rose 2.5% but the S&P 500 composite index dipped 1% in the same time frame.
Image Source: Zacks Investment Research
Favorable Style Score
AXP is positioned well for progress, evident by its VGM Score of A. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three factors.
Positive Estimate Revision
The Zacks Consensus Estimate for 2022 earnings has moved 0.5% north in the past 30 days.
Impressive Earnings Surprise History
American Express’ earnings beat estimates in each of the trailing four quarters, the average being 11.33%.
Solid Return on Equity
The return in equity of AXP was at 33.3% as of Sep 30, 2022, way higher than the industry figure of 19.9%. This reflects its efficiency in utilizing shareholders’ funds.
Business Tailwinds
Discount revenues of American Express, which account for a major chunk of its top line, are expected to grow on the back of improved network volumes. Its network volumes continue to be driven by the global economic recovery from the adverse impacts of the COVID- pandemic, which signals the scope for better Card Member spending.
Further, AXP’s discount revenues also benefit from growing travel and entertainment (T&E)-related volumes. Increased confidence in traveling due to the easing of the pandemic-linked restrictions will continue providing an impetus to the T&E-related volumes in the days ahead.
For 2022, American Express expects revenue growth in the range of 23-25%. The top line witnessed 17% year-over-year growth in 2021. Management anticipates the bottom line to cross its initial 2022 earnings per share guidance of $9.25-$9.65 this year.
The company continues to roll out innovative card offerings and upgrade the existing ones with benefits, marking its continuous efforts to invest in customer acquisition, engagement and retention initiatives.
In an evolving digital era, AXP has put its best foot forward to build an advanced digital solutions suite. This, in turn, continues to play a vital role in bolstering the customer base of American Express.
Simultaneously, with the launch of digital payment solutions, AXP also has effective fraud prevention services in place that have been developed with the help of partnerships and investments. In December 2022, it launched Amex Business Link to enable its network participants to extend seamless business-to-business (B2B) payments to their business clients, thus saving time and costs.
A strong financial position backed by growing cash reserves and robust cash-generating abilities has paved the way for American Express to undertake significant business investments and tactically deploy capital either through share buybacks or dividend payments.
Stocks to Consider
Some better-ranked stocks in the Finance space are Amalgamated Financial Corp. (AMAL - Free Report) , Community West Bancshares (CWBC - Free Report) and Fulton Financial Corporation (FULT - Free Report) . While Amalgamated Financial sports a Zacks Rank #1 (Strong Buy), Community West Bancshares and Fulton Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amalgamated Financial’s earnings surpassed estimates in each of the trailing four quarters, the average being 19.41%. The Zacks Consensus Estimate for AMAL’s 2022 earnings suggests an improvement of 51.2%, while the same for revenues suggests growth of 31.3% from the corresponding year-ago reported figures. The consensus mark for AMAL’s 2022 earnings has moved 4.8% north in the past 60 days.
The bottom line of Community West Bancshares beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 8.19%. The Zacks Consensus Estimate for CWBC’s 2022 earnings suggests an improvement of 0.7%, while the same for revenues suggests growth of 7.3% from the corresponding year-ago reported figures. The consensus mark for CWBC’s 2022 earnings has moved 7.9% north in the past 30 days.
Fulton Financial’s earnings outpaced estimates in three of the last four quarters and met the mark once, the average surprise being 11.13%. The Zacks Consensus Estimate for FULT’s 2022 earnings suggests an improvement of 10.5%, while the same for revenues suggests growth of 7.8% from the corresponding year-ago reported figures. The consensus mark for FULT’s 2022 earnings has moved 1.1% north in the past 60 days.
Shares of Amalgamated Financial, Community West Bancshares and Fulton Financial have gained 13.2%, 5.7% and 17%, respectively, in the past six months.