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American Express Has Strong 3Q17 Results: Raises Earnings Target

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AXP beat estimates

American Express (AXP) posted EPS (earnings per share) of $1.50 for 3Q17, which beat Wall Street’s estimate of $1.48. The company also beat analysts’ estimate for revenue. It reported ~$8.4 billion in revenue compared to analysts’ estimate of ~$8.3 billion.

AXP’s 3Q17 revenues reflect a 9.0% rise on a YoY (year-over-year) basis. The rise was seen as a result of cardmember spending. A rise in the company’s net interest income also contributed to the rise in 3Q17 revenues.

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American Express has also witnessed a substantial rise in its net income, from $1.1 billion in 3Q16 to $1.4 billion in 3Q17, a 19.0% increase. In its 3Q17 earnings call, Kenneth Chenault, the company’s current CEO (chief executive officer), announced that on February 1, 2018, Stephen Squeri will become the company’s new CEO. Chenault plans to retire when Squeri takes over.

American Express has also raised its 2017 EPS target to $5.80–$5.90, which could attract investor attention.

Beta values

American Express (AXP) has a beta value of 1.13. Below are the beta values of some of its consumer financial peers (XLF):

  • Visa (V): 1.13
  • Discover Financial Services (DFS): 1.66
  • Mastercard (MA): 1.21
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