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How Badly Will Coronavirus Ail American Express (AXP) Q1 Earnings?
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American Express Co.’s (AXP - Free Report) first-quarter 2020 earnings, scheduled on Apr 24, 2020, are likely to be negatively impacted by the coronavirus-induced economic slowdown.
The company observed softness in spending volumes in the last few days of February after a usual solid performance in the better part of the month as well as in January. This weakness in business persisted and further deteriorated in March as travel and all kinds of spending remained were suspended in the wake of the coronavirus breakout.
Accordingly, American Express now expects its first-quarter 2020 revenue growth in the range of 2-4% on a foreign exchange-adjusted basis and adjusted earnings per share in the $1.9-$2.1 band excluding reserve builds in the to-be-reported quarter.
The company’s one of the largest strategic partners is Delta Air Lines, along with which it issues cards under cobrand arrangements. Delta and Delta cobrand portfolio represented nearly 8% of the company’s worldwide billed and approximately 22% of its worldwide Card Member loans as of Dec 31, 2019. The Delta cobrand portfolio generates fee revenues and interest income from Card Members and discount revenues from Delta and other merchants for spending on Delta cobrand cards. Given that Delta Airlines cut capacity of several flights during the quarter to be reported, revenues for American Express are expected to have taken a hit.
We also expect to see no major increase in reward expenses and cost of card member services in the impending quarterly release. However, reward expenses have been rising over the last several quarters due to enhancement of the company’s U.S. platinum products as well as strong growth in its Delta cobrand portfolio. Also, the cost of services provided to the company’s card members that has been escalating over the past four years, is likely to have been subdued in the first quarter, indicating lower engagement levels across its premium travel services.
Q1 Earnings & Revenue Expectations
The Zacks Consensus Estimate for American Express’s first-quarter earnings of $6.65 per share implies an 18.9% decline from the prior-year reported number. Likewise, the consensus estimate for sales of $43.35 billion suggests a 0.47% dip from the year-ago reported figure.
Earnings Surprise History
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the last four quarters, the average being 0.87%. This is depicted in the chart below:
Our proven model does not conclusively predict an earnings beat for American Express this reporting cycle. The combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better increases the odds of a positive surprise.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter
Earnings ESP: American Express has an Earnings ESP of -7.70%.
Zacks Rank: American Express currently carries a Zacks Rank #4 (Sell).
Here are some companies worth considering from the finance sector as our model shows that these have the right combination of elements to beat on earnings this time around:
Virtu Financial, Inc. (VIRT - Free Report) has an Earnings ESP of +41.57% and a Zacks Rank #1 (Strong Buy).
FB Financial Corporation has an Earnings ESP of +15.94% and is Zacks #3 Ranked.
Heartland Financial USA, Inc. (HTLF - Free Report) has an Earnings ESP of +11.90% and a Zacks Rank of 3.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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How Badly Will Coronavirus Ail American Express (AXP) Q1 Earnings?
American Express Co.’s (AXP - Free Report) first-quarter 2020 earnings, scheduled on Apr 24, 2020, are likely to be negatively impacted by the coronavirus-induced economic slowdown.
The company observed softness in spending volumes in the last few days of February after a usual solid performance in the better part of the month as well as in January. This weakness in business persisted and further deteriorated in March as travel and all kinds of spending remained were suspended in the wake of the coronavirus breakout.
Accordingly, American Express now expects its first-quarter 2020 revenue growth in the range of 2-4% on a foreign exchange-adjusted basis and adjusted earnings per share in the $1.9-$2.1 band excluding reserve builds in the to-be-reported quarter.
The company’s one of the largest strategic partners is Delta Air Lines, along with which it issues cards under cobrand arrangements. Delta and Delta cobrand portfolio represented nearly 8% of the company’s worldwide billed and approximately 22% of its worldwide Card Member loans as of Dec 31, 2019. The Delta cobrand portfolio generates fee revenues and interest income from Card Members and discount revenues from Delta and other merchants for spending on Delta cobrand cards. Given that Delta Airlines cut capacity of several flights during the quarter to be reported, revenues for American Express are expected to have taken a hit.
We also expect to see no major increase in reward expenses and cost of card member services in the impending quarterly release. However, reward expenses have been rising over the last several quarters due to enhancement of the company’s U.S. platinum products as well as strong growth in its Delta cobrand portfolio. Also, the cost of services provided to the company’s card members that has been escalating over the past four years, is likely to have been subdued in the first quarter, indicating lower engagement levels across its premium travel services.
Q1 Earnings & Revenue Expectations
The Zacks Consensus Estimate for American Express’s first-quarter earnings of $6.65 per share implies an 18.9% decline from the prior-year reported number. Likewise, the consensus estimate for sales of $43.35 billion suggests a 0.47% dip from the year-ago reported figure.
Earnings Surprise History
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the last four quarters, the average being 0.87%. This is depicted in the chart below:
American Express Company Price and EPS Surprise
American Express Company price-eps-surprise | American Express Company Quote
Here is what our quantitative model predicts:
Our proven model does not conclusively predict an earnings beat for American Express this reporting cycle. The combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better increases the odds of a positive surprise.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter
Earnings ESP: American Express has an Earnings ESP of -7.70%.
Zacks Rank: American Express currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks That Warrant a Look
Here are some companies worth considering from the finance sector as our model shows that these have the right combination of elements to beat on earnings this time around:
Virtu Financial, Inc. (VIRT - Free Report) has an Earnings ESP of +41.57% and a Zacks Rank #1 (Strong Buy).
FB Financial Corporation has an Earnings ESP of +15.94% and is Zacks #3 Ranked.
Heartland Financial USA, Inc. (HTLF - Free Report) has an Earnings ESP of +11.90% and a Zacks Rank of 3.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>