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Category: Stock Market and American Express
Date: 25 January 2020 Stock Price: $135.11 We take a look at the 4th 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' 4th quarter 2019 earnings report
Data below refers to the latest quarters data unless specified otherwise:
- Total revenues: $11.365 billion (up from $10.474 billion for the same period of the previous year)
- Revenues increased by 9% over the last 12 months
- Expenses: $8.355 billion (up from $7.629 billion for the same period of the previous year)
- Expenses increased by 9% over the last 12 months
- Net earnings: $1.693 billion (down from $2.010 billion for the same period of the previous year)
- Diluted earnings per share: $2.03 (down from $2.32 for the same period of the previous year)
- PE ratio of American Express: 16.9
- Dividend declared: $0.43 (up from $0.39 for the same period of the previous year)
- Dividend yield: 1.27%
- Diluted weighted-average shares outstanding: 816 million (down from 852 million for the same period of the previous year)
- Cash and cash equivalents: $24 billion
- Cash and cash equivalents per share: $29.41
- Cash and cash equivalents makes up 21.7% of American Express' market capital
- Cash and cash equivalents makes up 12.12% of American Express' total assets
- Card member loans: $85 billion
- Card member loans makes up 42.9% of American Express' total assets
- Stockholders equity in American Express: $23.0 billion
- Stockholders equity per share: $28.18
- So American Express is trading a 4.79 times its stockholders equity which is outside the expected range of between 2 and 4 which most firms ten to trade at.
American Express' management commentary on their 4th quarter 2019 earnings report
New York – January 24, 2020 - American Express Company (NYSE: AXP) today reported fourth-quarter net income of $1.7 billion, or $2.03 per share, compared with net income of $2.0 billion, or $2.32 per share, a year ago. The year-ago period included $496 million, or $0.58 per share, of certain discrete tax benefits.
“We once again delivered steady, consistent performance in the fourth quarter, marking our 10th straight quarter of FXadjusted revenue growth at or above 8 percent,” said Stephen J. Squeri, Chairman and Chief Executive Officer. “These results demonstrate the success of our strategy to generate sustainable, profitable growth across the enterprise over the long term. “During 2019, we added 11.5 million new proprietary cards and continued to deliver solid billings growth. Almost 70 percent of our new Card Members are choosing our fee-based products, helping to drive card fee revenue growth of 17 percent. And, we delivered solid loan growth while maintaining industry-leading credit metrics.
“I am also pleased to report that we achieved our goal of virtual parity merchant coverage in the United States as of year-end 2019. We set this ambitious goal in 2016 recognizing the integral role of our merchant network in driving our growth, and we remain committed to continuing to increase our coverage globally
“We once again delivered steady, consistent performance in the fourth quarter, marking our 10th straight quarter of FXadjusted revenue growth at or above 8 percent,” said Stephen J. Squeri, Chairman and Chief Executive Officer. “These results demonstrate the success of our strategy to generate sustainable, profitable growth across the enterprise over the long term. “During 2019, we added 11.5 million new proprietary cards and continued to deliver solid billings growth. Almost 70 percent of our new Card Members are choosing our fee-based products, helping to drive card fee revenue growth of 17 percent. And, we delivered solid loan growth while maintaining industry-leading credit metrics.
“I am also pleased to report that we achieved our goal of virtual parity merchant coverage in the United States as of year-end 2019. We set this ambitious goal in 2016 recognizing the integral role of our merchant network in driving our growth, and we remain committed to continuing to increase our coverage globally
“Across our businesses, we continued to make investments to increase our share, scale and relevance. In the premium consumer space, we refreshed a number of our card products and cobrand portfolios globally, and we applied our successful product strategy to our business card portfolio with the launch of several small business Platinum cards and a new Corporate Card program for large enterprises. In total, we have launched or refreshed over 50 proprietary products globally across our commercial and consumer businesses in the past two years, resulting in greater engagement and strong new card acquisitions. “On the digital front, we are focused on integrating the new capabilities we recently acquired, and we’re seeing increased customer engagement across our digital channels. In fact, 81 percent of our active Card Members are digitally engaged with us either on our app or website.
“For 2020, we expect revenue growth in the range of 8 to 10 percent on an FX-adjusted basis and earnings of $8.85 - $9.25 per share. Our consistent performance, along with our continued investments in product innovation and growth opportunities, gives us confidence that we have a long runway for steady growth over the long term.”
“For 2020, we expect revenue growth in the range of 8 to 10 percent on an FX-adjusted basis and earnings of $8.85 - $9.25 per share. Our consistent performance, along with our continued investments in product innovation and growth opportunities, gives us confidence that we have a long runway for steady growth over the long term.”
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 $80.70 a stock and its currently trading at $135.11 a stock. That's a decent return of 67.4% 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 $138.13 than it is to its 52 week low of $99.38, 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 $138.13 than it is to its 52 week low of $99.38, which to us is an indication that the short term sentiment and momentum of American Express' stock is positive at this point in time.
American Express (NYSE: AXP) stock price history over the last 5 years
Recent coverage of American Express
The extract below discusses some of the latest news regarding American Express as obtained from Thestreet.com
American Express Co. (AXP) - Get Report posted stronger-than-expected fourth quarter earnings Friday as international billings growth offset a slower increase in domestic spending. American Express said earnings for the three months ending in December came in at $2.03 per share, up 16.6% from the same period last year and 2 cents ahead of the Street consensus forecast. Group revenues, American Express said, rose 9% to $11.4 billion, again beating analysts' forecasts of an $11.362 billion tally.
Looking into the 2020 financial year, American Express said it expects to see revenue growth in the region of 8% to 10% and adjusted earnings of between $8.85 and $9.25 per share. “During 2019, we added 11.5 million new proprietary cards and continued to deliver solid billings growth. Almost 70 percent of our new Card Members are choosing our fee-based products, helping to drive card fee revenue growth of 17 percent," said CEO Stephen Squeri. "And, we delivered solid loan growth while maintaining industry-leading credit metrics."
Read the full article here
American Express Co. (AXP) - Get Report posted stronger-than-expected fourth quarter earnings Friday as international billings growth offset a slower increase in domestic spending. American Express said earnings for the three months ending in December came in at $2.03 per share, up 16.6% from the same period last year and 2 cents ahead of the Street consensus forecast. Group revenues, American Express said, rose 9% to $11.4 billion, again beating analysts' forecasts of an $11.362 billion tally.
Looking into the 2020 financial year, American Express said it expects to see revenue growth in the region of 8% to 10% and adjusted earnings of between $8.85 and $9.25 per share. “During 2019, we added 11.5 million new proprietary cards and continued to deliver solid billings growth. Almost 70 percent of our new Card Members are choosing our fee-based products, helping to drive card fee revenue growth of 17 percent," said CEO Stephen Squeri. "And, we delivered solid loan growth while maintaining industry-leading credit metrics."
Read the full article here
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 $144.80 a stock (up slightly from our 3rd quarter 2019 earnings review of American Express). Therefore we believe the stock of American Express is undervalued at its current price of $135.11.
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 $144.80, so a good entry point into American Express' stock would be at $130.30 or below.
We expect the stock of American Express to tick up in coming weeks and months to levels closer to our target price (full value price).
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 $144.80, so a good entry point into American Express' stock would be at $130.30 or below.
We expect the stock of American Express to tick up in coming weeks and months to levels closer to our target price (full value price).
Next earnings release date for American Express
It is expected that American Express will release their 4th quarter 2019 earnings report will be released in late January 2020