American Express Co. (NYSE: AXP) delivered a solid beat-and-raise earnings report before the market opened on October 17. If history is any guide, the report may not be enough to reverse the slide in AXP stock that started earlier in the week. But that could be a buying opportunity for opportunistic investors.
American Express, or AMEX, beat expectations on the top and bottom lines. Total revenues net of interest expense came in at $18.4 billion, an 11% year-over-year (YoY) increase. Earnings per share (EPS) of $4.14 was 19% higher YoY.
AMEX also raised its full-year revenue and earnings guidance. On the top line, the company now expects growth between 9% and 10%. That’s a 1% gain on the low end of its prior guidance. It was a similar story on the bottom line with forecasted EPS between $15.20 and $15.50 up from the prior range of $15.00 and $15.50.
The company also reported a fractional increase in new card issuance, attributed to its international market. It also reported a 1% sequential increase in total loans & card member receivables versus billed business.
High-Income Consumers Keep Spending, Credit Quality Holds
Heading into earnings, one of the only questions facing American Express was what the company would have to say about credit quality and consumer health. On both fronts, the numbers show that, at least for American Express, both measures are stable.
The company’s top and bottom line results show that consumers spent more money and more often. One reason is that the company introduced refreshed versions of its U.S. Consumer and Business Platinum cards, which included near perks.
In remarks accompanying the earnings results, chief executive officer (CEO) Stephen J. Squeri remarked, “The initial customer demand and engagement exceeded our expectations, with new U.S. Platinum account acquisitions doubling compared to pre-refresh levels.”
He went on to say, :” Looking ahead, we are confident in our growth prospects as we continue to execute our proven product refresh strategy and enhance our powerful Membership Model to deliver value for our card members, merchant partners, and shareholders.”
And that growth is coming without added risk. American Express reported no change in the percentage of accounts reported as 30 days past due. In fact, the 1.3% number has been unchanged over the last five quarters. The company also reported a slight decline in net write-off rates from 2.0% to 1.9%, which was also consistent with the previous five quarters.
That’s good news. However, it does reflect the feelings of some analysts, such as those from JPMorgan Chase, who have expressed concerns about the widening gap between high—and low-income consumers. But at a time when quality matters, AMEX’s report reinforces its best-in-class status.
Valuation and Technicals Make American Express an Opportunity
With AXP stock recently hitting an all-time high, you may be wondering if the stock is worth chasing. It’s trading within a fraction of analysts’ consensus price target. However, many analysts have been increasing their price targets in September and October.
Plus, analysts expect earnings growth of 14.6% in the next 12 months. That’s consistent with AMEX’s own guidance of EPS growth between 14% and 16%. That means the company’s actual revenue growth could surprise to the upside. And with AXP stock trading for around 21x forward earnings, it offers a slight discount to the S&P 500, even if it is a premium to its historic average.
Will the Report Reverse the Bearish Momentum in American Express Stock?
AXP stock was up about 2.5% in pre-market trading. That pushed the stock above its 50-day simple moving average (SMA) of $323.86. If that holds into the trading session it will be reversal from recent price action which showed a slight pullback heading into the earnings report.
Momentum as measured by the MACD remains in negative territory (MACD: -1.29, Signal: -0.4637), and the MACD lines have crossed bearishly, suggesting sellers retain near-term control.
Technically, AXP is at a crossroads. If it can reclaim and hold above the SMA with follow-through buying, it could resume its prior uptrend. However, persistent weakness below this level may invite further downside pressure, especially if broader market sentiment or sector trends remain cautious.
For investors considering new positions, patience may be warranted: monitor for stabilization above the SMA and a bullish MACD crossover. Existing holders should watch for a break below the recent support area; use stop-loss discipline to manage downside risk. Earnings-related volatility could create tactical entry points for long-term portfolios once the post-report dust settles.
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