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Category: Stock Market and American Express (AXP)
Date: 26 April 2021 Stock Price of American Express (AXP): $144.33 Market Capital of American Express (AXP): $115.9 billion We take a look at the 1st quarter earnings report of their 2021 fiscal year of American Express, a leading global payments company that provides personal and business credit and travel cards. Revenues for the quarter came in at $9.06 billion and net income of $2.23 billion
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- Since the lows of mid-April, we have seen a steady recovery in our overall spending volumes. In fact, we had positive year-over-year growth in non-T&E spending, which has long accounted for the large majority of our overall volumes. While credit remains strong, with delinquencies and net write-offs at the lowest levels we have seen in a few years, we remain cautious about the direction of the pandemic and its impacts on the economy, which is reflected in our reserve levels. - Stephen J. Squeri, Chairman and Chief Executive Officer"
About American Express
American Express (NYSE: AXP) is a globally integrated payments company that provides customers with access to products, insights and experiences that enrich lives and build business success. Our integrated payments platform includes card-issuing, merchant-acquiring and card network businesses. We are a leader in providing payment products and services to a broad range of customers, including consumers, small businesses, mid-sized companies and large corporations around the world.
Founded in 1850 and headquartered in New York, American Express has a heritage built on service and sustained by innovation. American Express® cards issued by American Express as well as by third-party banks and other institutions on the American Express network are accepted at millions of merchants around the world.
Founded in 1850 and headquartered in New York, American Express has a heritage built on service and sustained by innovation. American Express® cards issued by American Express as well as by third-party banks and other institutions on the American Express network are accepted at millions of merchants around the world.
Overview of American Express' 1st quarter 2021 earnings report
- First-quarter consolidated total revenues net of interest expense were $9.1 billion, down 12 percent from $10.3 billion a year ago. The quarter primarily reflected declines in Card Member spending and loan volumes, as well as a lower average discount rate compared to the prior year.
- Consolidated provisions for credit losses resulted in a benefit of $675 million, primarily reflecting the previously mentioned reserve releases and lower net write-offs, compared with a provision expense of $2.6 billion a year ago, which primarily reflected significant credit reserve builds.
- Consolidated expenses were $6.7 billion, down 7 percent from $7.2 billion a year ago, reflecting lower customer engagement costs and operating expenses. Customer engagement costs were down due to the decline in Card Member spending and lower usage of travel-related Card Member benefits, partially offset by marketing investments the company made to rebuild growth momentum. The decrease in operating expenses was primarily driven by gains related to certain Amex Ventures equity investments, partially offset by higher deferred and other compensation costs.
- The consolidated effective tax rate was 25.3 percent, up from 18.8 percent a year ago. The increase primarily reflected the impact of certain discrete tax benefits in relation to lower pretax income in the prior year.
American Express' management commentary on their 1st quarter 2021 earnings report
New York – April 23, 2021 – American Express Company (NYSE: AXP) today reported first-quarter net income of $2.2 billion, or $2.74 per share, compared with net income of $367 million, or $0.41 per share, a year ago. The results reflected the impact of $1.05 billion ($802 million after tax) in credit reserve releases, primarily driven by continued improvements in the macroeconomic outlook and strong credit performance.
“I am pleased with our results in the first quarter, where we saw continued improvements in our core business along with best-in-class credit performance, and I’m especially encouraged by the progress we’re making to rebuild our growth momentum going forward,” said Stephen J. Squeri, Chairman and Chief Executive Officer. “Card member spending excluding travel and entertainment categories was 11 percent higher on an FX-adjusted basis than it was in the first quarter of 2019, and continues to represent the majority of spend on our network. We’ve also seen an uptick across all categories of travel and entertainment spending in the U.S. in recent weeks, increasing our confidence that domestic consumer travel will continue to recover. “We view 2021 as a transition year, where we are focused on making investments to rebuild growth momentum in our core business. We’ve fired up our card acquisition engine, adding 2.1 million new proprietary cards during the quarter. Also, the additional value we provided on several of our premium products is helping to drive increased Card Member engagement, and our attrition rates and customer satisfaction levels remain better than pre-pandemic levels.
“I am pleased with our results in the first quarter, where we saw continued improvements in our core business along with best-in-class credit performance, and I’m especially encouraged by the progress we’re making to rebuild our growth momentum going forward,” said Stephen J. Squeri, Chairman and Chief Executive Officer. “Card member spending excluding travel and entertainment categories was 11 percent higher on an FX-adjusted basis than it was in the first quarter of 2019, and continues to represent the majority of spend on our network. We’ve also seen an uptick across all categories of travel and entertainment spending in the U.S. in recent weeks, increasing our confidence that domestic consumer travel will continue to recover. “We view 2021 as a transition year, where we are focused on making investments to rebuild growth momentum in our core business. We’ve fired up our card acquisition engine, adding 2.1 million new proprietary cards during the quarter. Also, the additional value we provided on several of our premium products is helping to drive increased Card Member engagement, and our attrition rates and customer satisfaction levels remain better than pre-pandemic levels.
“Our investments to scale next horizon opportunities are well underway. We began the rollout of the Kabbage digital platform to our small business customers, and through our joint venture in China, we have now added more than 14 million merchants to our network. “Given the progress we’ve seen thus far and clear indicators that the economy is improving, I’m even more confident in our roadmap to achieve our aspiration of returning to the original EPS expectations we had for 2020 in 2022.”
American Express (AXP) stock price chart over the last 5 years
The image below shows the stock price history of American Express over the last 5 years. And it's been a pretty good time for American Express stockholders. Over the last 5 years the stock of American Express (AXP) has increased by 130%. No investor would say no to those type of returns.
The stock of American Express is trading at closer to its 52 week high than it is toits 52 week low which is a clear indication that the short term sentiment and momentum of American Express stock is positive at this point in time.
The stock of American Express is trading at closer to its 52 week high than it is toits 52 week low which is a clear indication that the short term sentiment and momentum of American Express stock is positive at this point in time.
Recent coverage of American Express
The extract below discusses some of the latest news regarding American Express as obtained from Marketwatch.com
American Express Co. shares AXP, -1.92% are falling in premarket trading Friday after the card company's first-quarter revenue came up short of expectations. The company posted first-quarter net income of $2.2 billion, or $2.74 a share, whereas it recorded net income of $367 million, or 41 cents a share, a year earlier. The net-income figure reflects the impact of $1.05 billion in credit-reserve releases as the economy and credit performance continue to improve. The FactSet consensus was for $1.61 in earnings per share. American Express's revenue, net of interest expense, came in at $9.06 billion, down from $10.31 billion a year prior. The declines reflected a drop in member spending and loan volumes, and a lower average discount rate versus the prior period. Analysts surveyed by FactSet were projecting $9.21 billion in revenue. Excluding the travel and entertainment categories, American Express saw card member spending that was 11% above what it was in the same period in 2019. In recent weeks, "all categories of travel and entertainment spending in the U.S." have increased, Chief Executive Stephen Squeri said in a release. "We view 2021 as a transition year, where we are focused on making investments to rebuild growth momentum in our core business," he continued. Shares are off 3.1% in premarket trading Friday. The stock has gained 16.7% over the past three months as the Dow Jones Industrial Average
Read the full article here
American Express Co. shares AXP, -1.92% are falling in premarket trading Friday after the card company's first-quarter revenue came up short of expectations. The company posted first-quarter net income of $2.2 billion, or $2.74 a share, whereas it recorded net income of $367 million, or 41 cents a share, a year earlier. The net-income figure reflects the impact of $1.05 billion in credit-reserve releases as the economy and credit performance continue to improve. The FactSet consensus was for $1.61 in earnings per share. American Express's revenue, net of interest expense, came in at $9.06 billion, down from $10.31 billion a year prior. The declines reflected a drop in member spending and loan volumes, and a lower average discount rate versus the prior period. Analysts surveyed by FactSet were projecting $9.21 billion in revenue. Excluding the travel and entertainment categories, American Express saw card member spending that was 11% above what it was in the same period in 2019. In recent weeks, "all categories of travel and entertainment spending in the U.S." have increased, Chief Executive Stephen Squeri said in a release. "We view 2021 as a transition year, where we are focused on making investments to rebuild growth momentum in our core business," he continued. Shares are off 3.1% in premarket trading Friday. The stock has gained 16.7% over the past three months as the Dow Jones Industrial Average
Read the full article here
American Express (AXP) latest stock valuation
So what is American Express stock worth based on the release of their latest earnings report? Based on American Express' latest earnings report our valuation models provide a target price (full value) price of American Express stock at $144 a stock. Therefore we believe the stock of American Express is fully valued at its current price of $144.33
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target price (full value price) which in this case is $144, so a good entry point into American Express' stock would be at $129.60 or below.
We expect the stock of American Express to trade in a narrow range around its current price in coming weeks and months as it is close to our target price (full value price). Since the stock of American Express is trading at close to our suggested entry price we rate the stock of American Express a hold
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target price (full value price) which in this case is $144, so a good entry point into American Express' stock would be at $129.60 or below.
We expect the stock of American Express to trade in a narrow range around its current price in coming weeks and months as it is close to our target price (full value price). Since the stock of American Express is trading at close to our suggested entry price we rate the stock of American Express a hold
Next earnings release date for American Express
It is expected that American Express will release their 2nd quarter 2021 earnings report will be released in late July 2021