Financial Performance

American Express Beats Q2 Earnings Estimates

Performance was driven by “a well-balanced mix of spending volumes, lending income, and card fees.”
American Express Beats Q2 Earnings Estimates

On Friday, American Express reported second-quarter income of $1.8 billion, up 9% from $1.6 billion a year ago, and diluted earnings per share was $2.07, up 13% from $1.84 per share a year ago.

Second-quarter consolidated total revenues net of interest expense were $10.8 billion, up 8% from $10 billion a year ago. Excluding the impact of foreign exchange rates, adjusted revenues net of interest expense grew 10%, a reflection of higher card member spending, loans, and card fees.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

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The company also reaffirmed its 2019 outlook and focused on its positive performance, despite the fact that American Express shares fell 2.5%.

“We continued the broad-based momentum throughout our business with the eighth straight quarter of FX-adjusted revenue growth at 8% or better,” said chairman and CEO Steve Squeri. “Once again, our performance was driven by a well-balanced mix of spending volumes, lending income, and card fees.”

“FX-adjusted card member spending was up 7%, led by consumers,” Squeri explained. “This spending is occurring against the backdrop of an economy that is growing at a steady, but modest pace relative to 2018.”

He added that total loans grew 11%, with over 60% of that increase coming from the company’s existing customers, and credit performance continued at industry-leading levels.

“We continued to enhance the benefits and services we offer and that helped us add 2.9 million new proprietary cards this quarter. Nearly 70% of those new consumer cards we acquired this quarter carry an annual fee – a strong sign that card members appreciate and are willing to pay for premium value.”

The credit card giant reaffirmed it feels “very good about the power of our business model and our returns on the investments we’ve been making to drive share, scale and relevance,” he said. “Given this quarter’s solid results, and all that we’ve achieved during the first half of the year, we are reaffirming our 2019 financial guidance of 8% to 10 % revenue growth and full-year results that are in line with our EPS range.”

The company also plans to continue returning a significant portion of the capital it generates to shareholders and expects to increase the regular quarterly dividend on its common shares outstanding to 43 cents per share from 39 cents beginning with the third quarter 2019, subject to approval by the company’s board of directors.

American Express shares have added about 34.7% since the beginning of the year, versus the S&P 500’s gain of 19.5%.

In active trading as of Thursday afternoon, American Express stock was at $125.55, down $2.90 or 2.2%. On Thursday, the stock opened at $126.75, with a high of $127.21 and a low of $124.02.