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AmEx (AXP) Q3 Earnings & Revenues Beat, 2018 Guidance Up

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American Express Company (AXP - Free Report) reported third-quarter 2018 adjusted earnings per share of $1.88, beating the Zacks Consensus Estimate by 5.6%. Moreover, the bottom line witnessed a 25.3% year-over-year improvement.

Better-than-expected results were mainly backed by higher card member spending, loans and fee income.

Delving Deeper

Revenues came in at $10.1 billion, beating the Zacks Consensus Estimate by 1.1%. The top line increased 9% year over year, driven by higher loan volumes and an increase in Card Member spending and fees.

Provisions for loss totaled $817 million, up 6% year over year, which is attributable to growth in loan and an increase in higher write-offs, partly offset by stable delinquency rates.

Total expenses of $7.2 billion increased 8% year over year due to higher rewards expense and other customer engagement costs. The effective tax rate declined to 22% from 26% in the year-ago quarter, courtesy of the Tax Act.

American Express Company Price, Consensus and EPS Surprise

 

Strong Segment Results

American Express’ Global Consumer Services segment reported net income of $779 million, up 15% year over year. Total revenues, net of interest expense of $5.4 billion, were up 11% year over year, reflecting higher loans and Card Member spending as well as fee income.

Global Commercial Services’ net income of $606 million was up 20% year over year. Total revenues, net of interest expenses, increased 9% year over year to $3.2 billion, primarily reflecting higher Card Member spending.

Global Merchant and Network Services’ net income rose 30% year over year to $580 million in the reported quarter. Total revenues, net of interest expenses, inched up 2% year over year to $1.6 billion on higher Card Member spending, partially offset by an expected decrease in the average discount rate and lower revenues from network partners.

Corporate and Other reported net loss of $311 million, wider than $246 million loss incurred in the year-ago quarter.

2018 Guidance Update

On the back of strong results in the first nine months of 2018, the company pulled up its earnings guidance. It now expects full-year 2018 revenues to be up 9% to 10% compared with earlier guidance of at least 9%.

Adjusted EPS is expected in the range of $7.30 to $7.40, up from the $6.90 to $7.30 range, that was set at the start of the year.

Zacks Rank

American Express carries a Zacks Rank #2 (Buy).

Upcoming Releases

Here are some companies poised to beat on earnings this quarter owing to a strong Zacks Rank as well as a positive Earnings ESP.

WEX Inc. (WEX - Free Report) is expected to report third-quarter earnings on Oct 31. This Zacks #2 Ranked stock has an Earnings ESP of +0.49%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

EVO Payments, Inc. (EVOP - Free Report)   is expected to report third-quarter earnings on Nov 7. This Zacks #3 (Hold) Ranked stock has an Earnings ESP of +2.91%.

Cardtronics PLC (CATM - Free Report) is expected to report third-quarter earnings on Nov 1. This Zacks #1 (Strong Buy) Ranked stock has an Earnings ESP of +3.2%.
 

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