Shares of globally integrated payments company American Express (AXP) have climbed 40.5% over the past 12 months. AXP’s recent fourth-quarter performance came in ahead of expectations on both its top-line and bottom-line fronts.
Buoyed by record levels of cardmember spending coupled with new card acquisitions and an increase in loan balances, revenue surged 30% year-over-year to $12.1 billion, outperforming estimates by $595.8 million. Earnings per share at $2.18 exceeded consensus by $0.34.
Further, on the back of a new growth plan and anticipated improvement in the macro environment, AXP sees 2022 revenue growth between 18% and 20% and earnings per share of $9.25 and $9.65.
With these positive developments in mind, let’s have a look at what’s changed in AXP’s key risk factors that investors should know.
According to the TipRanks Risk Factors tool, American Express’ top risk category is Finance & Corporate, contributing 9 of the total 34 risks identified for the stock.
In its recent report, the company has added one key risk factor under the Macro & Political risk category. Compared to a sector average of 4 Macro & Political risk factors, AXP has 6.
AXP highlighted the potential risks posed by climate change and the evolving concerns over climate change and environmental sustainability. Climate change-induced events and disasters could disrupt AXP’s or its customers’ operations. This could lead to market volatility, or an adverse impact on consumer spending and their ability to repay loans.
Additionally, AXP also faces risks stemming from the transition to a low-carbon economy. Legal requirements, changes undertaken in technology infrastructure, regulatory scrutiny, lower stakeholder confidence, or damage to reputation could mean higher expenses and adverse impact for the company.
Hedge Fund Activity
According to TipRanks data, the Wall Street’s top hedge funds have decreased holdings in American Express by 5.4 million shares in the last quarter, indicating a very negative hedge fund confidence signal in the stock based on activities of 25 hedge funds. Notably, Warren Buffett’s Berkshire Hathaway has a holding worth $24.8 billion in AXP.
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