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.
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’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.”
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.
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.
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.