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American Express (NYSE:AXP) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

American Express Company (NYSE:AXP) is scheduled to report Q3 earnings results on October 23, 2020.

The company is expected to report earnings of $1.34/share on revenue of $8.702 billion. The consensus earnings per share (EPS) of $1.34/share is based on a poll of 24 analysts and represents a decline in eps of −35.6% over the same quarter last year, when the company reported earnings of $2.08/share.

The revenue forecast of $8.702 billion based on a poll of 19 analysts implies a year-over-year (YoY) decline in revenue of −20.8%. Last year the company reported $10.989 billion in revenue for the quarter.

Expected to report EPS contraction of −35.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $8,702.10 $10,989.00 −20.8%
EPS $1.34 $2.08 −35.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 7 tracked quarters, and missed expectations 2 quarters.

What are your expectations from American Express Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.02 $0.29 1,112.9% Beat
Q1, 2020 $1.67 $0.41 −75.5% Missed
Q4, 2019 $2.01 $2.03 0.9% Beat
Q3, 2019 $2.02 $2.08 2.7% Beat
Q2, 2019 $2.02 $2.07 2.2% Beat
Q1, 2019 $1.97 $2.01 2.0% Beat
Q4, 2018 $1.80 $1.74 −3.2% Missed
Q3, 2018 $1.77 $1.88 6.5% 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 June 30, 2020, the stock price reacted by falling −1.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 24, 2020 $96.67 $95.33 −1.4% Decline
April 24, 2020 $82.46 $83.17 0.9% Increase
January 24, 2020 $131.37 $135.11 2.8% Increase
October 18, 2019 $119.10 $116.76 −2.0% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.25, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.25 implies a 1.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

American Express Company is currently trading at $102.47/share, down −2.3% for the day. The company is trading at approximately 74.2% of its 52-week high of $138.13/share. The company’s stock price is up 7.5% since the last earnings report and down −2.4% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 46.93 suggests the company is trading in technically neutral 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 20.86 and a forward P/E multiple of 28.98.

American Express Company’s current share price also implies a price-to-book (P/B) multiple of 3.92. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $102.47
P/E Ratio 20.9x
P/E Ratio (Fwd) 29.0x
PEG Ratio −0.5
Total Debt / Total Capital 37.4%
Levered Free Cash Flow $563 million
Price To Sales 2.4x

Finbox

American Express Company is a large-cap stock with a market capitalization of $82.505 billion. The company operates in the Financials sector and the Consumer Finance industry.

American Express Company, together with its subsidiaries, provides charge and credit payment card products, and travel-related services worldwide. The company operates through three segments: Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services. Its products and services include payment and financing products; network services; expense management products and services; and lifestyle services. The company’s 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. It sells its products and services to consumers, small businesses, mid-sized companies, and large corporations through mobile and online applications, third-party vendors and business partners, direct mail, telephone, in-house sales teams, and direct response advertising. American Express Company was founded in 1850 and is headquartered in New York, New York.

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