American Express Earnings Top; American Express Stock Nears Buy Point | Investor's Business Daily
American Express ( AXP) reported better-than-expected third-quarter earnings. Before the open, American Express stock rose modestly.
American Express Earnings
Estimates: Wall Street expected American Express earnings per share to rise 10% to $2.07, according to Zacks Investment Research. Revenue had been seen climbing 8% to $10.95 billion.
Results: American Express earnings grew 11% to $2.08 a share. Revenue advanced 8% to $10.989 billion, the smallest top-line gain since Q1 2017. Provisions for losses rose 8% to $879 million.
Outlook: Management reaffirmed its 2019 guidance of EPS of $7.85-$8.35. It sees Q4 revenue growth of 8%-10%.
American Express Stock
Shares rose 1.4% to 120.75 on the stock market today. American Express stock has built a 14-week flat base with a buy point of 129.44, MarketSmith analysis shows and retook ts 50-day moving average Thursday. The relative strength line is well off its highs for the year, which is a bearish sign.
Among rivals, fellow Dow Jones credit card giant Visa ( V), which posts earnings Oct. 24, and Mastercard ( MA), which reports Oct. 29, both rose a fraction. Both Visa stock and Mastercard stock have set up new flat bases, trading just above their 50-day lines.
Analysts see American Express earnings rising 11% in both 2019 and 2020. That's short of the 25% minimum preferred by CAN SLIM, however it is a reasonable return for such a large, mature company.
American Express stock has an IBD Composite Rating of 78, which is well below the ideal mark of 95. The IBD Stock Checkup Tool shows earnings growth has averaged just 9% over the past three quarters. On a more optimistic note they had accelerated in the previous two quarters.
Analyst Rates American Express Stock
Heading into earnings, CFRA analyst Chris Kuiper was rating American Express stock as a hold with a 130 target.
"We think AXP has demonstrated it is navigating the competitive landscape well with relatively strong spending by its customers," he said in an Oct. 12 research note. "While the changing interest rate environment may crimp net interest margins, we think AXP is positioned better than peers with 75% of revenue from fees compared to peer's 20%."
However Kuiper also believes American Express stock is still exposed to risks in the credit card industry, namely slowing loan and billings growth.
"We are also skeptical on AXP's ability to deliver operating leverage as rewards and marketing expenses continue to rise and reductions in fixed operating expenses have stalled," he said.YOU WILL ALSO LIKE: IBD 50 Payments Leader Nears New Buy Point These Stocks Are Sitting On A $1 Trillion Opportunity In Payments This Hot China IPO Is IBD Stock Of The Day As Rival Breaks Out IBD Digital: Unlock IBD's Premium Stock Lists, Tools And Analysis Today These Are The 5 Best Stocks To Buy And Watch Now
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