American Express (AXP) Exceeds Market Returns: Some Facts to Consider

In the latest trading session, American Express (AXP) closed at $214.56, marking a +0.27% move from the previous day. This move outpaced the S&P 500's daily gain of 0.04%. Elsewhere, the Dow gained 0.16%, while the tech-heavy Nasdaq lost 0.28%.

The credit card issuer and global payments company's shares have seen an increase of 13.78% over the last month, surpassing the Finance sector's gain of 3.66% and the S&P 500's gain of 5.01%.

The investment community will be closely monitoring the performance of American Express in its forthcoming earnings report. The company's earnings per share (EPS) are projected to be $3, reflecting a 25% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $15.74 billion, up 10.18% from the year-ago period.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $12.80 per share and revenue of $66.23 billion, indicating changes of +14.18% and +9.44%, respectively, compared to the previous year.

Investors should also pay attention to any latest changes in analyst estimates for American Express. These revisions help to show the ever-changing nature of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 3.01% increase. Right now, American Express possesses a Zacks Rank of #2 (Buy).

Digging into valuation, American Express currently has a Forward P/E ratio of 16.72. For comparison, its industry has an average Forward P/E of 10.96, which means American Express is trading at a premium to the group.

One should further note that AXP currently holds a PEG ratio of 1.21. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The Financial - Miscellaneous Services industry currently had an average PEG ratio of 0.97 as of yesterday's close.

The Financial - Miscellaneous Services industry is part of the Finance sector. With its current Zacks Industry Rank of 149, this industry ranks in the bottom 41% of all industries, numbering over 250.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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