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AmEx Q3 Earnings Beat Estimates on Consumer Spending Growth
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American Express Company (AXP - Free Report) reported third-quarter 2024 earnings per share (EPS) of $3.49, which beat the Zacks Consensus Estimate by 6.7%. The bottom line climbed 6% year over year.
Total revenues net of interest expense amounted to $16.6 billion, which marginally missed the Zacks Consensus Estimate. However, the top line improved 8.2% year over year in the quarter under review.
The strong third-quarter 2024 earnings benefited from rising net interest income, growth in the customer base of Millennials and Gen-Z and improving retention rates driving growth in the U.S. Consumer Services Billed business. Higher card member spending and fee growth also benefited the results. The results were partially offset by escalating customer engagement and marketing expenses.
American Express Company Price, Consensus and EPS Surprise
Network volumes of $441 billion rose 5% year over year in the third quarter on the back of higher consumer spending. However, the figure lagged the Zacks Consensus Estimate of $454.1 billion. Total interest income of $6.1 billion increased 17% year over year and beat the consensus mark of $6 billion.
Provision for credit losses escalated 10% year over year to $1.4 billion due to a rise in net write-offs partially offset by a reduced net reserve build.
Total expenses increased 9% year over year to $12.1 billion due to an elevated customer engagement cost level, which resulted from expanding Card Member spending, higher usage of travel-related benefits and marketing expenses.
Segmental Performances
The U.S. Consumer Services segment’s pre-tax income of $1.7 billion improved 5% year over year in the third quarter and beat the Zacks Consensus Estimate of $1.3 billion. Total revenues net of interest expense climbed 10% year over year to $7.9 billion on the back of improved net interest income and higher Card Member spending. Growth in the customer base of Gen-Z and Millennials also favored this segment’s results.
The Commercial Services segment recorded a pre-tax income of $908 million in the quarter under review, which rose 7% year over year but missed the Zacks Consensus Estimate of $1 billion. Total revenues net of interest expense amounted to $4 billion, which grew 7% year over year on the back of an increase in net interest income. The reported figure beat the consensus mark of $3.9 billion.
The International Card Services segment reported a pre-tax income of $455 million in the third quarter, which rose 18% year over year and beat the consensus mark by 64%. Total revenues net of interest expense improved 11% year over year to $2.9 billion, beating the consensus mark by 1.4%. The year-over-year growth was attributable to expanding Card Member spending and rising card fee revenues.
The Global Merchant and Network Services segment’s pre-tax net income of $991 million improved 1% year over year in the quarter under review and beat the Zacks Consensus Estimate of $953 million. Total revenues net of interest expense declined 0.2% year over year to $1.5 billion.
Corporate and Other incurred a pre-tax loss of $809 million in the third quarter, wider than the prior-year quarter’s loss of $709 million.
Balance Sheet (as of Sept. 30, 2024)
American Express exited the third quarter with cash & cash equivalents of $47.9 billion, up from $46.6 billion at 2023-end. Total assets of $271 billion rose from $261.1 billion at 2023-end.
Long-term debt amounted to $53.5 billion, up from $47.9 billion at 2023-end. Short-term borrowing was $1.5 billion.
Shareholders’ equity of $29.7 billion improved 5.9% year over year.
Return on average common equity deteriorated 270 basis points year over year to 35.3%.
Capital Deployment Update
American Express bought back 8 million common shares in the third quarter of 2024. The company paid a per share dividend worth 70 cents in the quarter under review.
2024 Outlook Revised
AXP continues to anticipate revenues to increase between 9% and 11% in 2024 from the 2023 level of $60.5 billion. Management revised its EPS estimate upward to the range of $13.75-$14.05, the mid-point of which indicates an improvement of 24% from the 2023 level of $11.21.
Long-Term View
The company earlier expected revenue growth of more than 10% over the long term, while EPS is likely to continue registering mid-teens growth.
AXP’s Zacks Rank and Key Picks
American Express currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Finance space may look at some better-ranked players like Jackson Financial Inc. (JXN - Free Report) , HIVE Digital Technologies Ltd. (HIVE - Free Report) and WisdomTree, Inc. (WT - Free Report) . While Jackson Financial and HIVE Digital sport a Zacks Rank #1 (Strong Buy) at present, WisdomTree carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $18.79 per share, which indicates 46.3% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current-year revenues suggests a 117.5% surge from a year ago.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 63.6% year-over-year improvement. During the past 60 days, HIVE has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current-year revenues is pegged at $121.5 million, indicating 6.1% year-over-year growth.
The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 67.6% year-over-year growth. WT’s earnings estimate remained stable over the past month. It beat earnings estimates twice in the past four quarters and met on the other occasions, with an average surprise of 5.9%.
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AmEx Q3 Earnings Beat Estimates on Consumer Spending Growth
American Express Company (AXP - Free Report) reported third-quarter 2024 earnings per share (EPS) of $3.49, which beat the Zacks Consensus Estimate by 6.7%. The bottom line climbed 6% year over year.
Total revenues net of interest expense amounted to $16.6 billion, which marginally missed the Zacks Consensus Estimate. However, the top line improved 8.2% year over year in the quarter under review.
The strong third-quarter 2024 earnings benefited from rising net interest income, growth in the customer base of Millennials and Gen-Z and improving retention rates driving growth in the U.S. Consumer Services Billed business. Higher card member spending and fee growth also benefited the results. The results were partially offset by escalating customer engagement and marketing expenses.
American Express Company Price, Consensus and EPS Surprise
American Express Company price-consensus-eps-surprise-chart | American Express Company Quote
Q3 Operational Performance
Network volumes of $441 billion rose 5% year over year in the third quarter on the back of higher consumer spending. However, the figure lagged the Zacks Consensus Estimate of $454.1 billion. Total interest income of $6.1 billion increased 17% year over year and beat the consensus mark of $6 billion.
Provision for credit losses escalated 10% year over year to $1.4 billion due to a rise in net write-offs partially offset by a reduced net reserve build.
Total expenses increased 9% year over year to $12.1 billion due to an elevated customer engagement cost level, which resulted from expanding Card Member spending, higher usage of travel-related benefits and marketing expenses.
Segmental Performances
The U.S. Consumer Services segment’s pre-tax income of $1.7 billion improved 5% year over year in the third quarter and beat the Zacks Consensus Estimate of $1.3 billion. Total revenues net of interest expense climbed 10% year over year to $7.9 billion on the back of improved net interest income and higher Card Member spending. Growth in the customer base of Gen-Z and Millennials also favored this segment’s results.
The Commercial Services segment recorded a pre-tax income of $908 million in the quarter under review, which rose 7% year over year but missed the Zacks Consensus Estimate of $1 billion. Total revenues net of interest expense amounted to $4 billion, which grew 7% year over year on the back of an increase in net interest income. The reported figure beat the consensus mark of $3.9 billion.
The International Card Services segment reported a pre-tax income of $455 million in the third quarter, which rose 18% year over year and beat the consensus mark by 64%. Total revenues net of interest expense improved 11% year over year to $2.9 billion, beating the consensus mark by 1.4%. The year-over-year growth was attributable to expanding Card Member spending and rising card fee revenues.
The Global Merchant and Network Services segment’s pre-tax net income of $991 million improved 1% year over year in the quarter under review and beat the Zacks Consensus Estimate of $953 million. Total revenues net of interest expense declined 0.2% year over year to $1.5 billion.
Corporate and Other incurred a pre-tax loss of $809 million in the third quarter, wider than the prior-year quarter’s loss of $709 million.
Balance Sheet (as of Sept. 30, 2024)
American Express exited the third quarter with cash & cash equivalents of $47.9 billion, up from $46.6 billion at 2023-end. Total assets of $271 billion rose from $261.1 billion at 2023-end.
Long-term debt amounted to $53.5 billion, up from $47.9 billion at 2023-end. Short-term borrowing was $1.5 billion.
Shareholders’ equity of $29.7 billion improved 5.9% year over year.
Return on average common equity deteriorated 270 basis points year over year to 35.3%.
Capital Deployment Update
American Express bought back 8 million common shares in the third quarter of 2024. The company paid a per share dividend worth 70 cents in the quarter under review.
2024 Outlook Revised
AXP continues to anticipate revenues to increase between 9% and 11% in 2024 from the 2023 level of $60.5 billion. Management revised its EPS estimate upward to the range of $13.75-$14.05, the mid-point of which indicates an improvement of 24% from the 2023 level of $11.21.
Long-Term View
The company earlier expected revenue growth of more than 10% over the long term, while EPS is likely to continue registering mid-teens growth.
AXP’s Zacks Rank and Key Picks
American Express currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Finance space may look at some better-ranked players like Jackson Financial Inc. (JXN - Free Report) , HIVE Digital Technologies Ltd. (HIVE - Free Report) and WisdomTree, Inc. (WT - Free Report) . While Jackson Financial and HIVE Digital sport a Zacks Rank #1 (Strong Buy) at present, WisdomTree carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $18.79 per share, which indicates 46.3% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current-year revenues suggests a 117.5% surge from a year ago.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 63.6% year-over-year improvement. During the past 60 days, HIVE has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current-year revenues is pegged at $121.5 million, indicating 6.1% year-over-year growth.
The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 67.6% year-over-year growth. WT’s earnings estimate remained stable over the past month. It beat earnings estimates twice in the past four quarters and met on the other occasions, with an average surprise of 5.9%.