Post Earnings Coverage as American Express Tops Market Estimates and Raised Earnings Outlook

LONDON, UK / ACCESSWIRE / October 25, 2016 / Active Wall St. announces its post-earnings coverage on American Express Co. (NYSE: AXP). The company posted its financial results for the third quarter fiscal 2016 on October 19, 2016. The company reported stronger-than-expected earnings and revenue and raised its 2016 adjusted earnings forecast. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on AXP. Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=AXP.

Earnings Reviewed

Scroll to continue with content
Ad

For the quarter ended on September 30th, 2016, American Express reported that net income was $1.1 billion, down 10% from $1.3 billion a year ago. On per share basis, the company reported diluted earnings per share of $1.20 in the reported quarter, down 3% from $1.24 in Q3 2015. Excluding a restructuring charge related to cost reduction efforts, adjusted diluted earnings per share came in at $1.24. Over the past 12 months, the company has repurchased 72 million shares which have driven a 7% reduction in the average share count.

For Q3 2016, American Express reported consolidated total revenues net of interest expense of $7.8 billion, lower by 5% from $8.2 billion in the year earlier period. Excluding the impact of Costco-related revenues in the year ago-period, adjusted revenues net of interest expense increased 5%, reflecting a rise in Card Member spending, along with higher net interest income and net card fees. The results topped Wall Street's expectations of earnings of $0.97 per share on revenue of $7.71 billion.

Consolidated expenses were $5.5 billion, down 3% from $5.7 billion a year ago. The prior year included Costco-related rewards costs, and an impairment of goodwill and technology assets.

American Express's net interest income declined 11% on lower reported loans while up 10% on an adjusted basis. Adjusted loans were up 12% and net interest yield on card member loans increased year-over-year. These impacts were partially offset in net interest income by higher funding costs related to the charge card portfolio due to an increase in interest rates versus last year. Net interest income represented 17% of the company's total revenues during Q3 2016.

The company raised its full-year adjusted earnings forecast to $5.90-$6.00 per share from $5.40-$5.70 per share and reaffirmed its 2017 forecast, driven by faster than expected progress on its cost-cutting initiatives. Analysts expect the company to earn $5.50 per share in 2016, according to Thomson Reuters I/B/E/S.

Segment Results

For Q3 2016, American Express' U.S. Consumer Services reported net income of $401 million, down 26% from $542 million a year ago. Total revenues net of interest expense fell 13% to $2.9 billion, from $3.3 billion in Q3 2015.

The Company's International Consumer and Network Services segment's net income increased 1% to $155 million compared to $154 million a year ago. Total revenues net of interest expense were $1.4 billion, up 5% or 7% on constant currency basis from $1.3 billion a year ago. The increase primarily reflected higher Card Member spending and net card fees.

Net income for American Express' Global Commercial Services segment in Q3 2016 remained unchanged to $466 million. Total revenues net of interest expense were $2.4 billion, unchanged from a year ago. Global Merchant Services earnings declined 10% to $359 million from $397 million a year ago. Total revenues net of interest expense were $1.1 billion, down 6% from $1.2 billion in Q3 2015. Meanwhile the Corporate and Other unit reported net loss of $240 million compared with net loss of $295 million a year ago.

Stock Performance

On Monday, the stock closed the trading session at $67.09, slightly falling 0.40% from its previous closing price of $67.36. A total volume of 5.14 million shares have exchanged hands, which was higher than the 3-month average volume of 4.36 million shares. American Express' stock price advanced 5.60% in the last month, 4.75% in the past three months, and 2.37% in the previous six months. The stock is trading at a PE ratio of 11.88 and has a dividend yield of 1.91%.

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@activewallst.com
Phone number: 1-858-257-3144

Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active Wall Street

What to Read Next