Shares in American Express (AXP) rose in pre-market trading today as wealthy travelers flashing the cash on their holidays helped it beat Q1 profit forecasts.
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Earnings and Revenues Beat
The credit card giant reported earnings per share of $4.28, up 18% on the same period last year and ahead of Wall Street expectations of $4.03 per share.
In addition, it reported:
- Total revenues net of interest expense of $18.9 billion, up 11% year-over-year, and beating $18.62 billion expectations
- Net income of $3.0 billion, compared with net income of $2.6 billion a year ago
- Billed business, a measure of total spending on AmEx cards, rose 9% to $428 billion
- It also reaffirmed its full-year 2026 guidance for 9 to 10% revenue growth and EPS of $17.30 to $17.90
It had been feared that economic uncertainty would have blasted consumer confidence and resulted in more constrained spending. Interest rate and inflation concerns, resulting from the Iran war, were also expected to have taken a toll.
However, it appears that those well-heeled Americans have continued taking their cards out of their wallets and purses. American Express highlighted travel and lifestyle spending.
‘Premium Customer’ Momentum
“We had a very strong start to the year, reflecting continued momentum across our premium customer base and execution of our proven growth strategy,” said Stephen J. Squeri, chairman and chief executive officer.
American Express has in recent years stepped up investments in marketing, digital capabilities and rewards programs to attract younger Gen Z customers as long-term cardholders.
“Card Member spending grew 9% FX-adjusted, the highest quarterly growth in three years, driven by strong demand and engagement with our premium products,” Squeri added.
The company also set aside $1.3 billion in consolidated provisions for credit losses in the quarter, compared with $1.2 billion a year ago. That slight increase is encouraging as there had been concerns over a potential surge in bad loans in the current climate as customers default.
Squeri also said the company had decided to increase its investments in marketing and technology to capitalize on long-term growth opportunities. He highlighted recent AI innovation with the announcement of the Amex Agentic Commerce Experiences developer kit and industry-first Agent Purchase Protection.
Is AXP a Good Stock to Buy Now?
On TipRanks, AXP has a Moderate Buy consensus based on 7 Buy, 9 Hold and 1 Sell ratings. Its highest price target is $425. AXP stock’s consensus price target is $352.27, implying a 5.82% upside.
