American Express Company (NYSE: $AXP) is a multinational financial services company that specializes in card products and travel services. It offers customers a wide range of credit cards and other payment solutions for individuals, small businesses, and corporations.
On Friday, April 19, 2024, American Express released its Q1 fiscal 2024 results to a positive market reaction.
American Express Q1 Results
In the first quarter, American Express reported an 11% jump in revenue to $15.8 billion, ahead of the forecast of $15.79 billion. EPS rose 39% to $3.33, beating estimates of $2.98. Net income increased 34% to $2.4 billion compared to $1.8 billion a year ago.
Other Key Highlights
In the quarter, the company saw Card Member spending rise 7% on an FX-neutral basis, with US card spending up 8%, while International Card Services saw a 13% increase on an FX-neutral basis.
In the quarter, American Express reported that it acquired 3.4 million new customers, with its fee-based products accounting for around 70% of the acquisitions. It reported rising interest among Gen Z and Millennials, who accounted for over 60% of the new acquisitions.
Total network volume increased 5% Y/Y to $419B, below estimates of $421B and the $434 billion reported in Q423.
Net interest income grew 26% Y/Y to $3.77 billion, while provision for credit loss rose 20% Y/Y to $1.27B, primarily driven by higher net write-offs and offset by lower net reserve build in the current quarter.
The consolidated expenses rose 3% to $11.4 billion, driven by higher customer engagement costs, partially offset by $196 million due to an upgrade to the models for estimates of future membership reward redemptions.
Card member loans rose to $126.6 billion, up from $109.1 billion the previous year, while the net-write-off rate was 2.3% compared to 1.7% the previous year.
American Express 2024 Guidance
The company forecasts revenue will grow 9%-11% in fiscal 2024, with EPS growing 13%-17% to $12.65-$13.15.
AXP Stock Performance
American Express shares were up 3.52% on Friday, April 19, 2024, to $225.15 as of 10:00 AM, driven by the revenue and earnings beat in the Q124 results. Year-to-date AXP shares are up 19.97%, and in the past 52 weeks, the shares are up 32.80%, outperforming the SPX, which is up 21.23% in the same period.
AXP shares are trading just below the 52-week high of $231.69 and above the 50 DMA and 200 DMA of $219.28 and $180.05, respectively.
Looking at the share distribution, 21.06% of the shares are held by insiders, while institutions hold 65.29% of the stock. Investors are short on 1.17% of the float and 0.93% of the shares outstanding.
Analysts Outlook
19 Wall Street analysts give AXP stock an overall moderate buy rating. They forecast a broad range for the stock, with a high of $265 and a low of $159 in the next 12 months. The average price target of $222 is a 2.30% downside based on the last price.
Should You Invest in AXP Shares?
American Express has proven resilient amid a downturn in spending and 11 rate hikes by the Fed in the past two years. While American consumers have been resilient thus far, Amex has been cautious about the default risk and has raised risk provision to $1.3 billion in Q124 compared to $1.1 billion a year ago.
Amex has largely bucked the larger trend of softness expectations and maintained its prior revenue and earnings guidance. Based on its guidance and moderate buy rating by analysts, APX shares would make a great addition to your portfolio.
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