American Express Surge: Will the Momentum Last as Q4 Earnings Approach?
This week, major credit card companies are set to release their quarterly results, with a particular focus on American Express AXP.
On Tuesday, AXP reached a new 52-week high of $319 per share, marking an impressive increase of over +70% in the past year. This growth significantly outpaces broader indexes and many competitors, including Capital One’s COF at +49% and Mastercard’s MA at +20%.
As we await its Q4 earnings on Friday, January 24, the question remains whether AXP can sustain this upward trajectory.
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Q4 Financial Expectations for American Express
Analysts predict American Express will report Q4 sales of $17.18 billion, reflecting a 9% rise from $15.8 billion year-over-year. Earnings per share (EPS) are estimated to increase by 15% to $3.03, compared to $2.62 in the same quarter last year.
Looking at fiscal 2024, total sales are projected to reach $65.95 billion, with annual earnings expected to grow 19% to $13.40 per share. Notably, American Express has beaten the Zacks EPS Consensus in three of the past four quarters, averaging a surprise of 6.53%.
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Future Outlook for FY25
As we look to FY25, American Express’s revenue is anticipated to grow by 8% to $71.48 billion, while annual earnings are projected to rise 14% to $15.24 per share.
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AXP Valuation Insights
Currently, AXP trades at 20.5X forward earnings, slightly below the S&P 500 benchmark. It also trades at a discount compared to Mastercard’s 32.3X but remains at a premium to Capital One’s 12.5X.
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Conclusion
As American Express prepares for its Q4 earnings report, it holds a Zacks Rank #3 (Hold). Despite its reasonable valuation, the upcoming earnings will need to reinforce the company’s positive outlook in light of its substantial stock gains.
Long-term investors may find value at current levels; however, potential better buying opportunities could arise, especially if a post-earnings selloff occurs.
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American Express Company (AXP): Free Stock Analysis Report
Mastercard Incorporated (MA): Free Stock Analysis Report
Capital One Financial Corporation (COF): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
