American Express Company AXP released its fourth-quarter 2023 earnings report, revealing an earnings per share (EPS) of $2.62, marking a 1.1% shortfall from the Zacks Consensus Estimate. However, the bottom line surged 27% from the prior year’s figure. Total revenues, net of interest expense, stood at $15.8 billion, marking an 11% increase year over year, but falling short of the Zacks Consensus Estimate by 1.4%.
A Recap of the Quarter’s Performance
The quarterly results were hindered by surging customer engagement and compensation costs, partially offset by augmented net interest income and increased Card Member spending, resulting in robust segmental contribution.
Operational Insights
Network volumes saw a 5% uptick reaching $434.4 billion, driven by elevated consumer spending. However, the figure fell short of the Zacks Consensus Estimate. Total interest income experienced a 40% surge year over year, surpassing the consensus mark.
Segmental Performance Overview
In the U.S. Consumer Services segment, pre-tax income rose 14% year over year, exceeding the Zacks Consensus Estimate. The Commercial Services segment saw a 22% increase in pre-tax income, while the International Card Services segment reported a turnaround from pre-tax loss to income. The Global Merchant and Network Services segment achieved a 19% year-over-year increase in pre-tax net income. Conversely, Corporate and Other marked a narrower pre-tax loss compared to the prior year.
Balance Sheet and Capital Deployment
American Express concluded the fourth quarter with $47 billion in cash & cash equivalents, representing a 38% surge from the previous year, while total assets grew 14% to $261 billion. The company initiated a buyback of six million common shares and announced a 17% hike in the first-quarter 2024 dividend.
Outlook and Long-Term Perspective
For 2024, AXP forecasts revenue growth between 9% and 11% and anticipates earnings per share in the range of $12.65-$13.15. The company reaffirmed its long-term vision of more than 10% revenue growth and mid-teens earnings per share growth.
Industry Insights
In the finance sector, other players such as Synchrony Financial, Ally Financial Inc., and State Street Corporation have also reported their fourth-quarter results, showcasing a mixed performance compared to the Zacks Consensus Estimate.
Synchrony Financial exceeded the Zacks Consensus Estimate for its fourth-quarter 2023 EPS, but witnessed a decline year over year. Meanwhile, Ally Financial Inc. reported that its fourth-quarter adjusted EPS surpassed estimates.
Financial Review: Ally, State Street, and Fourth-Quarter 2023 Earnings
Ally Financial Inc.’s Fourth-Quarter 2023 Earnings Recap
Ally Financial Inc. ($ALLY) reported earnings of 45 cents per share, slightly surpassing the Zacks Consensus Estimate by a penny. However, the bottom line reflected a decline of 58.3% from the year-ago quarter. Total quarterly GAAP net revenues were $2.07 billion, marking a 6.1% decrease from the prior-year quarter. Nevertheless, the top line exceeded the Zacks Consensus Estimate of $1.99 billion.
Net financing revenues were down 10.8% from the prior-year quarter to $1.49 billion. The adjusted net interest margin recorded a 3.20% decrease, falling 48 basis points year over year. During the reported quarter, the company recorded net charge-offs of $623 million, reflecting a 59.7% increase from the prior-year quarter. As of Dec 31, 2023, total net finance receivables and loans amounted to $135.9 billion, a marginal decrease from the prior-quarter end.
State Street Corporation’s Fourth-Quarter 2023 Earnings Recap
State Street Corporation ($STT) reported fourth-quarter 2023 adjusted earnings of $2.04 per share, surpassing the Zacks Consensus Estimate of $1.81. However, the bottom line experienced a 1.4% decline from the prior-year quarter. Quarterly total revenues of $3.04 billion took a 3.5% year-over-year dip, although the top line surpassed the Zacks Consensus Estimate of $2.94 billion.
Net interest revenues were $678 million, dropping 14.3% year over year. The net interest margin also saw a decline, dropping 13 basis points to 1.16%. Total fee revenues remained relatively stable at $2.37 billion, while the provision for credit losses amounted to $20 million, up from $10 million in the prior-year quarter. Assets under management were $4.13 trillion as of Dec 31, 2023, an 18.6% year-over-year increase.
Investment Opportunities
Not satisfied with your current investments? Every investor dreams of finding that one stock that will skyrocket. While it may sound like a fairy tale, Zacks Investment Research has identified five potential home runs that are set to grow by 100% or more in 2023. Most of these stocks are quietly gaining momentum, offering great opportunities for investors who want to get in on the ground floor.
Want to learn more about these investment prospects and how to make the most of them? You can check out Zacks Investment Research’s latest recommendations and stock analyses for free. Take a look at some of the highlighted stocks, such as American Express Company (AXP), State Street Corporation (STT), Ally Financial Inc. (ALLY), and Synchrony Financial (SYF).
So, if you’re keen on finding the next big investment opportunity, check out these potential home runs before they take off.
Did you enjoy learning about these opportunities? Curious to read more financial insights? You can find the full article on Zacks.com here.
If you want to explore more investment prospects, feel free to visit Zacks Investment Research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
