Why American Express Company Stock Jumped 6% Today

What happened

Shares of American Express Company (NYSE: AXP  ) are on the move, rising by about 6% as of 3:00 p.m. EDT on Thursday. Investors were pleased by the company's first-quarter earnings, and its progress toward its earnings goal for the full year.

So what

American Express reported a profit of $1.34 per share vs. the consensus analyst estimate of $1.28 per share. Higher spending by card-carrying customers helped drive revenue growth of 7%, adjusted for currency fluctuations and the contribution of its Costco co-branded card to its results in the same period last year.

The company reported that total loans on a worldwide basis grew to $65.3 billion in the first quarter, an 11% increase over the year-ago period. Loans grew 12% when adjusted for currency impacts.

Fanned out credit cards

Image source: Getty Images.

Lending has become a larger part of American Express' strategy to grow revenue and profit. In prepared remarks on the company's conference call, AmEx Executive Vice President and Chief Financial Officer Jeff Campbell said, "During the first quarter, more than 50% of the growth in U.S. consumer loans came from existing customers, consistent with the trend we described at our Investor Day."

Increased rewards expenses somewhat offset higher revenue, as the company refreshed its American Express Platinum card to compete with other high-end cards, including a recent product launch by JPMorgan's Chase brand, the Chase Sapphire Reserve.

Several Wall Street analysts upped their price targets following the company's earnings report. Bernstein, which has the most bullish view on the company's shares, increased its price target to $95, citing robust revenue growth.

Now what

American Express reiterated its guidance for the rest of the year, guiding for earnings per share between $5.60 and $5.80 in 2017. 

"I would just conclude by saying we certainly feel very confident in the $5.60 to $5.80 EPS guidance range that we have reconfirmed again today," Campbell said in a reply to an analyst's question about the company's earnings guidance.

Year-over-year comparisons will become more favorable going forward, as the impact of its lost partnership with Costco only partially impacted its second-quarter 2016 results, and didn't fully disappear from its results until the third quarter of 2016.

10 stocks we like better than American Express
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and American Express wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 3, 2017

Read/Post Comments (0) | Recommend This Article (0)

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 4014603, ~/Articles/ArticleHandler.aspx, 4/29/2017 7:14:17 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 9 hours ago Sponsored by:
Change down DOW 20940.5 -40.8 -0.2%
Change down S&P 500 2384.2 -4.6 -0.2%
Change down NASD 6047.6 -1.3 0.0%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

4/28/2017 4:01 PM
AXP $79.25 Down -1.08 -1.34%
American Express CAPS Rating: ****

Article registration testing

Revisit this page

Clear article's cache and revisit this page

Or, visit the current page, forcing Test ID to article:interrupt:106919 and

Tookie Value = 21872790767150928059211663109815