Markets
GPN

AmEx (AXP) Q2 Earnings Beat, Revenues Miss, Guidance Intact

American Express CompanyAXP reported second-quarter 2018 adjusted earnings per share of $1.84, beating the Zacks Consensus Estimate by 0.55%. Moreover, the bottom line witnessed a 25% year-over-year improvement.

Better-than-expected results were mainly backed by higher spending by consumer, small business, and corporate Card Members. This was, however, partially offset by increase in cost of rewards.

American Express Company Price, Consensus and EPS Surprise

American Express Company Price, Consensus and EPS Surprise | American Express Company Quote

Delving Deeper

Revenues came in at $10 billion, 0.5% below of the Zacks Consensus Estimate of $10.05 billion. The top line increased 9% year over year, driven by higher loan volumes and increase in Card Member spending and fees.

Provisions for loss totaled $806 million, up 38% year over year, which is attributable to growth in the loan and charge portfolio and an increase in higher write-offs.

Total expenses of $7.1 billion increased 7% year over year due to higher rewards expenses incurred and costs associated with marketing and business development.

The effective tax rate declined to 22% from 31% in the year-ago quarter, courtesy of the tax reform.

Strong Segment Results

American Express' Global Consumer Services segment reported net income of $770 million, up 25% year over year. Total revenues, net of interest expense of $5.3 billion, were up 12% year over year, reflecting higher loans and Card Member spending as well as fee income.

Global Commercial Services' net income of $564 million was up 18% year over year. Total revenues, net of interest expenses, increased 8% year over year to $3.2 billion, primarily reflecting higher Card Member spending.

Global Merchant and Network Services' net income rose 14% year over year to $543 million in the reported quarter. Total revenues, net of interest expenses, inched up 1% year over year to $1.6 billion on higher Card Member spending, partially offset by an expected decrease in the average discount rate and lower revenues from network partners.

Corporate and Other reported net loss of $254 million, wider than $224 million loss incurred in the year-ago quarter.

2018 Guidance Update

The company retained its 2018 earnings per share guidance on the high end of the $6.90-$7.30 range, which it had issued in the first quarter.

Revenue growth estimates were, however, pulled up. The company now expects the same to grow at least 9% compared with the earlier estimate of at least 8% growth.

Zacks Rank

American Express carries a Zacks Rank #3 (Hold).

Upcoming Releases

Here are some companies poised to beat on earnings this quarter owing to a strong Zacks Rank as well as a positive Earnings ESP.

Mastercard Incorporated MA is expected to report second-quarter earnings on Jul 26. This Zacks #3 Ranked stock has an Earnings ESP of +0.31%.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Visa Inc. V is expected to report third-quarter fiscal 2018 earnings on Jul 25. This Zacks #3 Ranked stock has an Earnings ESP of +0.30%.

Global Payments Inc. GPN is expected to report second-quarter earnings on Aug 2. This Zacks #3 Ranked stock has an Earnings ESP of +0.15%.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Express Company (AXP): Free Stock Analysis Report

Mastercard Incorporated (MA): Free Stock Analysis Report

Visa Inc. (V): Free Stock Analysis Report

Global Payments Inc. (GPN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

GPN V AXP MA

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More