American Express Declines Despite Q1 Beat

Credit card service company American Express (AXP) has delivered better-than-expected first-quarter results on the back of increased spending by cardholders. However, shares of the company declined 2.4% in Friday’s early trading session as the company’s outlook for 2022 missed estimates.

American Express has reported earnings of $2.73 per share, down one cent year-over-year, beating analysts’ estimates of $2.48 per share. Additionally, net revenues came in at $11.74 billion, up 29% compared to the year-ago quarter, outpacing estimates of $10.64 billion.

The robust revenue growth can be attributed to higher Card Member spending and an increase in network volume. Also, higher interest income supported the revenue growth. Total Network Volumes grew 30% to $350.3 billion.

Commenting on the results, Stephen J. Squeri, the Chairman and CEO of American Express, said, “This performance was enabled by our ongoing investments in areas critical to sustainable, long-term growth, including customer acquisition, engagement and retention.”

“We added 3 million new proprietary cards in the quarter, as acquisitions of U.S. Consumer Platinum and Gold Cards and U.S. Business Platinum Cards reached alltime highs for the quarter. With travel activity continuing to pick up, we also had record monthly acquisitions for our Delta Cards in March,” he added.

Outlook

Meanwhile, the company has reaffirmed its 2022 outlook. It continues to expect revenue growth of 18-20%. Further, earnings are anticipated to be in the range of $9.25 and $9.65, compared with the consensus estimate of $9.71 per share.

Stock Rating

Overall, the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on eight Buys and 10 Holds. AXP’s average price forecast of $197.37 implies 6.3% upside potential to current levels.

Investors’ Sentiment

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on American Express, as 2.9% of investors increased their exposure to AXP stock over the past 30 days.

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