American Express Earnings Call
Source: American Express

American Express Misses Q3 Earnings Forecast, Stock Falls

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On Oct. 23, American Express stock fell 2.7 percent in the premarket trading session after the company released its third-quarter earnings results. Its earnings missed analysts’ average estimate, but its revenue beat their forecast.

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When did American Express report earnings?

American Express reported its third-quarter 2020 financial results this morning before the market opened. The financial services company will hold its earnings conference call at 8:30 a.m. ET. Participants can access the webcast and presentation materials on the company’s investor relations website.

American Express Earnings Call
Source: American Express
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American Express’s earnings report highlights

In the third quarter, American Express reported EPS of $1.30, compared with $2.08 in the third quarter of 2019. The EPS missed analysts’ average estimate of $1.34. American Express generated sales of $8.75 billion in the third quarter, which was 20.4 percent lower than in the third quarter of 2019. The company beat analysts’ average sales estimate of $8.66 billion. Its provision for credit losses fell from $879 million to $665 million.

In the company's press release, CEO Stephen Squeri said, “Since the lows of mid-April, we have seen a steady recovery in our overall spending volumes. In fact, we had positive year-over-year growth in non-T&E spending, which has long accounted for the large majority of our overall volumes. While credit remains strong, with delinquencies and net write-offs at the lowest levels we have seen in a few years, we remain cautious about the direction of the pandemic and its impacts on the economy, which is reflected in our reserve levels.”

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American Express’s stock price is falling after its Q3 results

American Express stock was down about 2.7 percent at $102 in premarket trading today as of 7:11 a.m. ET. The stock rose 3.3 percent on Oct. 22 and closed at $104.79 with a market capitalization of $84.4 billion.

The stock has fallen by 0.1 percent in the last five days and 11.4 percent in the last year. The stock is trading 24.1 percent below its 52-week high of $138.13 and 56.4 percent above its 52-week low of $67.

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American Express Earnings Call
Source: American Express

What is American Express’s dividend yield?

As of Oct. 22, American Express’s dividend yield was 1.70 percent. Currently, the company pays an annual dividend of $1.72 per share.

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What is American Express’s stock forecast?

According to data compiled by TipRanks, three of the 13 analysts covering American Express have a "buy" or equivalent rating. Six analysts have a "hold" rating, and four recommend "sell." Currently, analysts' average stock price forecast for American Express is $105.46, which suggests a 0.6 percent upside. Their highest target price of $127 implies a 21.2 percent upside, while their lowest target price of $88 implies a 16 percent downside.

I don't see now as the right time to buy American Express stock, as the company’s business has been hit hard by the COVID-19 pandemic. The spending volumes or billings on airlines and lodging won’t return to pre-COVID-19 levels for another few years. A full recovery will depend on a vaccine or treatment becoming available.

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