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American Express (AXP) crushed second-quarter earnings estimates on Friday morning as payment volumes in the United States picked up amid an economic recovery. AXP stock rose ahead of the open, signaling a record high.
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American Express Earnings
Estimates: Wall Street analysts expected American Express earnings per share to skyrocket 466% to $ 1.64 from last year’s quarter. Revenue is expected to climb 23% to $ 9.47 billion.
Results: American Express profits jumped 866% to $ 2.80 per share with revenues up 33% to $ 10.24 billion. AmEx freed up $ 866 million in credit loss reserves, which drastically boosted results, especially EPS. A year earlier, AmEx added $ 1.6 billion to loss reserves.
“We have seen cardholder spending accelerate from the previous quarter and surpass pre-pandemic levels in June, with most of that spending growth coming from millennial, millennial customers. Z and small businesses, ”CEO Stephen Squeri said in the results. Release.
Outlook: American Express has yet to come up with a new forecast except to say that it now expects to hit the high end of its original forecast for 2020 next year.
Management previously guided 2021 EPS at $ 6- $ 7.50 for 2021 and 2022 at $ 8.85- $ 9.25. The Wall Street consensus pegged American Express earnings per share at $ 7.63 for 2021 and $ 9.24 for 2022.
AXP actions
Shares of financial giant Dow Jones rose 2.2% to 174.75 in the stock market today after climbing as high as 5% to a new intraday high of 179.67.
MarketSmith chart analysis shows that AXP stock is stretched from a buy point of 150.55 from a cup base with a handle on a weekly chart. AXP stock recently had a new buying opportunity on the 10 week line.
AXP stock’s relative strength line is at a 52 week high. Its RS index is 87 out of 99 possible. Its EPS index is 66.
Competitors of card payment Visa (V) and MasterCard (MA) report the earnings next week. Visa shares, also a member of the Dow Jones, rose 2.2%. MA stock climbed 3%.
Count on a rebound in spending
American Express CFO Jeffrey Campbell told a Morgan Stanley payments conference in June that a strategy to expand the reach of its members was essential.
“In particular, when you look at our consumer business, we’re expanding the concept of membership to evolve beyond some of its more travel-oriented goals to become more of a way of life. the pandemic has only reinforced this existing strategy, ”he said.
Campbell said that to date, T&E spending globally has been around 50% of 2019 levels. But that’s an improvement from the first quarter, when it was about 60% down by compared to 2019 levels.
He added that the development of his network in China is a long-term goal.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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