AmEx Gains from Uber Alliance, Shares Hit 52-Week High - Analyst Blog

American Express Co. ( AXP ), or AmEx'slatest attempt to aggressively penetrate into the mobile-payments market led its shares to scale new 52-week high of $95.88 on Jun 9. This global payment processor's shares has risen about 7.4% alone since the beginning of 2013 and 9.3% since release of its first-quarter 2014 results in mid-April.

The momentum of this Zacks Rank #3 (Hold) stock was driven by strong credit indicators, higher capital returns and strategic alliances including the one with global firm for superior brands of car-rental service − Uber Technologies Inc.

Monday's closing price represents a strong one-year return of about 22.5%, which outperformed the S&P 500 index of 18.7% as well. Average volume of shares traded over the last three months stands at approximately 3,482.7K.

Earnings Review

On Jan 16, AmEx reported fourth-quarter 2013 operating earnings per share of $1.33, higher than both the Zacks Consensus Estimate and the year-ago quarter figure by 2.3% and 15.7%, respectively. Overall, the companydelivered positive earnings surprise in 3 of the last 4 quarters with an average beat of 2.2%.

The upbeat earnings resulted from higher spending on cards as well as improvements innet interest income and loan portfolio. Further, higher yields, lower operating expenses and strong credit indicators were partially offset by higher provision for losses

Mobile Payments a New Growth Catalyst

AmEx has been focusing on strengthening performance in its U.S. card services and Global Network & Merchant Services segments, both of which witnessed healthy growth during first-quarter 2014. The addition of Uber to its network further acts as a growth catalyst for AmEx's mobile-payments business.

Valued at about $17 billion, Uber is a venture capital-backed start-up that has gained strong valuations in a short span of 4 years. Per the alliance, AmEx aims to tap all the customers of Uber to use its cards on the latter's mobile application. For this, AmEx will be reward the members with extra points for booking cars through this application.

We look forward to many more of such tactical merchant alliances by AmEx within the mobile-payments space, which is expected to be booming. Early this year, Forrester Research Inc. estimated that the market for mobile payments in the U.S. is expected to grow to almost $90 billion by 2017 from about $12.8 billion in 2012.

Given the convenience, affordability and security, both merchants and consumers are steadily adopting mobile payments, raising growth prospects for AmEx as well. The recent alliance with Wal-Mart Stores Inc. ( WMT ), the merchant acquiring program - OptBlue and the dividend hike further instill confidence among the investors.

Meanwhile, some better-ranked financial stocks like Global Cash Access Holdings Inc. ( GCA ) and Euronet Worldwide Inc. ( EEFT ) are worth considering. Both the stocks carry a Zacks Rank #2 (Buy).

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

AMER EXPRESS CO (AXP): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

GLOBAL CASH ACS (GCA): Free Stock Analysis Report

EURONET WORLDWD (EEFT): Free Stock Analysis Report

To read this article on 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


Other Topics


Latest Markets Videos


    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

    Learn More