American Express Q4 Earnings Preview: AXP Up 10.4% Since Last Report

in EARNINGS/INVESTING IDEAS by

American Express Company (NYSE:AXP) is scheduled to report Q4 earnings results on January 24, 2020, before markets open for trading.

The company is expected to report earnings of $2.02/share on revenue of $11.378 billion. The consensus earnings per share (EPS) of $2.02/share is based on a poll of 20 analysts and represents a growth of 16.1% over the same quarter last year when the company reported earnings of $1.74/share.

The revenue forecast of $11.378 billion based on a poll of 20 analysts implies a year-over-year (YoY) growth of 8.6%. Last year the company reported $10.474 billion in revenue for the quarter.

Expected to report EPS growth of $0.28/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $11,378.45 $10,474.00 8.6%
EPS $2.02 $1.74 16.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter. What are your expectations from American Express for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $2.04 $2.08 2.0% Beat
Q2, 2019 $2.03 $2.07 2.1% Beat
Q1, 2019 $1.98 $2.01 1.5% Beat
Q4, 2018 $1.79 $1.74 -2.8% Missed
Q3, 2018 $1.77 $1.88 6.2% Beat
Q2, 2018 $1.82 $1.84 1.1% Beat
Q1, 2018 $1.72 $1.86 8.1% Beat
Q4, 2017 $1.55 $1.58 1.9% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price reacted by falling by -2.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-18 $119.10 $116.76 -2.0% Decline
2019-07-19 $128.40 $124.82 -2.8% Decline
2019-04-18 $111.76 $113.67 1.7% Increase
2019-01-17 $99.41 $100.48 1.1% Increase

Fundamentals And Technical Analysis

American Express is currently trading at $130.53/share, down -0.8% for the day. The company is trading at approximately 99.0% of its 52-week high of $131.86/share. The company’s stock price is up 11.8% since the last earnings report and up 1.3% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 76.83 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:AXP Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 15.2x and a forward P/E multiple of 15.9x. American Express’s current share price also implies a price-to-book (P/B) multiple of 4.7x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $130.53
P/E Ratio 15.2x
P/E Ratio (Fwd) 15.9x
PEG Ratio 2.6
Total Debt to Capital (%) 36.6%
Levered Free Cash Flow $7.49 billion
Enterprise Value / EBITDA

Source: Finbox

Company Profile: American Express Company

American Express Company is a large-cap stock with a market capitalization of $107.6 billion. The company operates in the Financial sector and the Consumer Finance industry.

American Express Company, together with its subsidiaries, provides charge and credit payment card products, and travel-related services to consumers and businesses worldwide. It operates through three segments: Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services.

The company’s products and services include charge and credit card products, as well as other payment and financing products; network services; expense management products and services; travel-related services; and prepaid products.

Its products and services also comprise merchant acquisition and processing, servicing and settlement, point-of-sale marketing, and information products and services for merchants; and fraud prevention services, as well as the design and operation of customer loyalty programs.

The company sells its products and services to consumers, small businesses, mid-sized companies, and large corporations through online and mobile applications, third-party vendors and business partners, direct mail, telephone, in-house teams, and direct response advertising.

American Express Company was founded in 1850 and is headquartered in New York, New York.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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