American Express (NYSE:AXP) reported better-than-expected Q1 revenue of $11.74 billion, compared to analyst estimates of $11.63 billion. The also company reported Q1 EPS of $2.73, topping the consensus estimates of $2.39 per share.
Total expenses in the quarter stood at $9.06 billion, up 34% YoY and above analyst expectations of $8.85 billion. The financial services company reported a network volume of $350.3 billion, up 30% YoY and above the consensus estimates of $344.99 billion.
For FY, AXP still expects EPS in the range of $9.25 to $9.65, below the estimated $9.72 per share. The company expects revenue growth of more than 10% and EPS growth in the mid-teens in 2024 and afterward.
“Our strong first-quarter results demonstrated the continued business momentum we’ve achieved over the last several quarters despite the uncertain macro environment… Travel and Entertainment spending was up 121 percent on an FX-adjusted basis over a year ago and essentially reached pre-pandemic levels globally for the first time in March, driven by continued strength in consumer travel,” commented CEO Stephen J. Squeri.
Citi analyst Arren Cyganovich says results were “largely in line as the top line outperformance and higher expenses largely offset” each other. Cyganovich added that “strong top line growth and momentum in signing up new card members supports AXP’s lofty revenue growth expectations over the intermediate term, but we see this as already priced into the shares.”
Goldman Sachs analyst Ryan Nash said AXP delivered “another decent quarter.” He sees any weakness as a good opportunity to buy AXP stock as the company offers “best in class revenue growth and improving card acquisition/card fee growth.”
“Given the fact that it reiterated top and bottom line expectations along with a negative provision, the logical conclusion is that its increasing investments/expenses (likely to get details on the call) unless any reserve builds will be back-end loaded. Shares have outperformed materially YTD on higher spend, re-opening benefits and as a hedge against inflation (+13.5% vs. SPX -8%) and given the fact that there is no “follow through” on the higher EPS (i.e. it’s not increasing guidance) we think there is a chance the stock could be soft today,” Nash added in client memo.
AXP stock price is trading moderately lower today.
By Senad Karaahmetovic