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Category: Stock Market and American Express
Date: 14 October 2019 Stock Price: $116.30 We take a look at the 2nd quarter earnings report of their 2019 fiscal year of American Express, a leading global payments company that provides personal and business credit and travel cards with $87.4 billion in total loans issued.
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About American Express
American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success.
Overview of American Express' latest earnings report
Data below refers to quarterly data unless specified otherwise:
- Total revenues: $10.838 billion (down from $10.002 billion for the same period of the previous year)
- Revenues increased by 8.3% over the last 12 months
- Expenses: $7.758 billion (up from $7.105 billion for the same period of the previous year)
- Expenses increased by 9.1% over the last 12 months
- Net earnings: $1.761 billion (up from $1.623 billion for the same period of the previous year)
- Diluted earnings per share: $2.07 (up from $1.84 for the same period of the previous year)
- PE ratio: 9.5
- Diluted weighted-average shares outstanding: 836 million (down from 862 million for the same period of the previous year)
- Cash and cash equivalents: $30 billion
- Cash and cash equivalents per share: $35.88
- Cash and cash equivalents makes up 31% of American Express' market capital
- Cash and cash equivalents makes up 15.9% of American Express' total assets
- Card member loans: $81.062 billion
- Card member loans makes up 41% of American Express' total assets
- Stockholders equity in American Express: $23.092 billion
- Stockholders equity per share: $27.62
- So American Express is trading a 2.87 times its stockholders equity which is within the expected range of between 2 and 4 which most firms ten to trade at.
- Cash generated from operations (for the 6 months): $11.47 billion
- Cash generated from operations per share (for the 6 months): $13.63
American Express' management commentary on the results
New York – July 19, 2019 - American Express Company (NYSE: AXP) today reported second-quarter net income of $1.8 billion, up 9 percent from $1.6 billion a year ago. Diluted earnings per share was $2.07, up 13 percent from $1.84 per share a year ago.
“We continued the broad-based momentum throughout our business with the eighth straight quarter of FX-adjusted revenue growth at 8 percent or better,” said Steve Squeri, chairman and chief executive officer. “Once again, our performance was driven by a well-balanced mix of spending volumes, lending income and card fees. “FX-adjusted Card Member spending was up 7 percent, led by consumers. This spending is occurring against the backdrop of an economy that is growing at a steady, but modest pace relative to 2018. Total loans grew 11 percent, with over 60 percent of that increase coming from our existing customers. Credit performance continued at industry-leading levels.
“We continued to enhance the benefits and services we offer and that helped us add 2.9 million new proprietary cards this quarter. Nearly seventy percent of those new consumer cards we acquired this quarter carry an annual fee – a strong sign that Card Members appreciate and are willing to pay for premium value. “I feel very good about the power of our business model and our returns on the investments we’ve been making to drive share, scale and relevance. Given this quarter’s solid results, and all that we’ve achieved during the first half of the year, we are reaffirming our 2019 financial guidance of 8 to 10 percent revenue growth and full-year results that are in line with our EPS range. ”
“We continued the broad-based momentum throughout our business with the eighth straight quarter of FX-adjusted revenue growth at 8 percent or better,” said Steve Squeri, chairman and chief executive officer. “Once again, our performance was driven by a well-balanced mix of spending volumes, lending income and card fees. “FX-adjusted Card Member spending was up 7 percent, led by consumers. This spending is occurring against the backdrop of an economy that is growing at a steady, but modest pace relative to 2018. Total loans grew 11 percent, with over 60 percent of that increase coming from our existing customers. Credit performance continued at industry-leading levels.
“We continued to enhance the benefits and services we offer and that helped us add 2.9 million new proprietary cards this quarter. Nearly seventy percent of those new consumer cards we acquired this quarter carry an annual fee – a strong sign that Card Members appreciate and are willing to pay for premium value. “I feel very good about the power of our business model and our returns on the investments we’ve been making to drive share, scale and relevance. Given this quarter’s solid results, and all that we’ve achieved during the first half of the year, we are reaffirming our 2019 financial guidance of 8 to 10 percent revenue growth and full-year results that are in line with our EPS range. ”
American Express (NYSE: AXP) stock price history
The image below, obtained from Google, 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. 5 years ago the stock was trading at around $82.60 a stock and its currently trading at $116.40 a stock. That's a decent return of 40.9% provided to American Express stockholders over the last 5 years.
The stock of American Express is trading at a lot closer to its 52 week high of $129.30 than it is to its 52 week low of $89.05, which to us is an 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 a lot closer to its 52 week high of $129.30 than it is to its 52 week low of $89.05, which to us is an 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 Thestreet.com
Consumers and business owners will experience industry-leading rewards starting January 30, 2020, when American Express (NYSE: AXP) and Delta Air Lines (NYSE: DAL) relaunch the Delta SkyMiles ® American Express Card portfolio. Driven by extensive research, listening to customers and a continuous effort to exceed customer expectations, the portfolio will have benefits that offer more ways to earn miles and feature new travel benefits.
Consumers and business owners will experience industry-leading rewards starting January 30, 2020, when American Express (NYSE: AXP) and Delta Air Lines (NYSE: DAL) relaunch the Delta SkyMiles ® American Express Card portfolio. Driven by extensive research, listening to customers and a continuous effort to exceed customer expectations, the portfolio will have benefits that offer more ways to earn miles and feature new travel benefits.
American Express (NYSE: 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 (full value) price of American Express stock at $132.40 a stock. Therefore we believe the stock of American Express is undervalued at its current price of $116.40.
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target (full value) price which in this case is $132.40, so a good entry point into American Express' stock would be at $119.16 or below. Considering the fact that American Express is trading at below our suggested entry point into the group's stock we rate American Express as a buy.
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target (full value) price which in this case is $132.40, so a good entry point into American Express' stock would be at $119.16 or below. Considering the fact that American Express is trading at below our suggested entry point into the group's stock we rate American Express as a buy.
Next earnings release date for American Express
American Express confirmed that their 3rd quarter 2019 earnings report will be released on 18 October 2019