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American Express earnings: What to expect
MARKETWATCH 7:26 AM ET 10/19/2016
Symbol Last Price Change
AXP 60.8up +0.72 (+1.2%)
QUOTES AS OF 11:40:04 AM ET 10/19/2016
The stock has fallen on the day after nine of the last 10 quarterly reports were released

American Express Co. (AXP) is scheduled to release third-quarter results on Wednesday, after the closing bell, with analysts expecting a year-over-year decline in earnings.

Although the credit card company (AXP) has made a habit of beating lower profit expectations, as it has in nine of the past 10 quarters, investors have tended to be disappointed with the results. The stock declined on the day after results were released nine times in the past 10 quarters.

Analyst John Hecht at Jefferies Group remains cautious about American Express(AXP) with a hold rating, citing worries about a "tepid retail spending environment" and the continued significant investment in marketing.

Here's what investors can expect:

Earnings: American Express(AXP) is expected to report earnings per share of 97 cents, according to the average estimate of analysts surveyed by FactSet, down from $1.24 in the same period a year ago. The earnings outlook has declined sharply over the past few months, from a FactSet EPS consensus of $1.10 at the start of the third quarter.

Those surveyed by Estimize, which includes sell-side analysts like FactSet, but also hedge-fund executives, brokerages and buy-side analysts, are a bit more optimistic, with a consensus EPS estimate of $1.01.

AmEx beat the FactSet EPS consensus the past three quarters, and posted a beat in nine of the past 10.

(https://sw.graphiq.com/w/kCUEJvXoTNr)

Revenue: The FactSet consensus for revenue is $7.71 billion, down from $8.19 billion, but up slightly from a FactSet consensus of $7.69 billion as of June 30. Those crowdsourced by Estimize are forecasting, on average, revenue of $7.69 billion.

Revenue fell shy of expectations in the second quarter, and has missed estimates in eight of the past 11 quarters.

Stock price: American Express's(AXP) stock has underperformed the broader stock market and its credit-card peers by a wide margin this year, amid concerns over the retail spending environment and the fallout from losing the co-branded card deal with Costco Wholesale Corp (http://www.marketwatch.com/story/5-things-to-know-about-the-costco-and-amex-breakup- 2016-02-11). (COST)

The stock has dropped 14% year to date through Tuesday, while shares of Visa Inc. (V) have gained 5.2%, MasterCard Inc.'s stock (MA) has climbed 4.5% and the Dow Jones Industrial Average has tacked on 4.2%.

(https://sw.graphiq.com/w/lEMWZJztfVP)

Other issues: Investors should keep a keen eye out for any comments from the company about the impact of the end of the Costco deal, such as how the company may try to make up for the loss of card members.

Analyst Josh Beck at Pacific Crest said he has a "cautious bias" on American Express(AXP), as the company may have to increase marketing, promotions and rewards to recapture what it lost with the end of the Costco partnership.

Any discussion by management about the effect of competition should also be a focus. "Specifically, we note that [the merchant discount rate] faces downward pressure and that competition remains heightened for high-income, 'spend-centric' consumers," J.P. Morgan analyst Richard Shane wrote.

Among some other financial metrics American Express(AXP) is expected to report, according to FactSet:

-- Net card fees--$684.9 million.

-- Travel commissions and fees--$44.7 million.

-- Net interest income--$1.32 billion.

-Tomi Kilgore; 415-439-6400; [e-mail]


(END) Dow Jones Newswires
10-19-160726ET
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