Market News

With Q2 Revenues Gaining 31%, American Express Raises FY22 Outlook

Story Highlights

Driven by a rebound in corporate travel and entertainment spend, American Express posted robust second-quarter results, beating analysts’ expectations on both top and bottom line results.

American Express (AXP) reported stronger-than-expected Q2 results, topping both earnings and revenue estimates, driven by robust demand and performance across all segments.

Furthermore, the company raised its FY2022 revenue outlook but reiterated its earnings outlook. Shares of the credit card company gained 1.9% on July 22 to close at $153.01.

AXP’s Q2 Beat 

The company reported earnings of $2.57 per share, which impressively beat analysts’ expectations of $2.40 per share. However, it was lower than the reported earnings of $2.80 per share in the prior-year period.

Meanwhile, revenues gained 30.9% year-over-year to $13.4 billion and also exceeded consensus estimates of $12.4 billion.

The revenue gain reflects a surge in card member spending, which gained 30%, driven by robust demand for travel and entertainment globally. 

Furthermore, the company added 3.2 million new proprietary cards during the quarter, driven by strong demand for its premium products. 

AXP Raises Revenue Outlook for FY2022

Based on robust Q2 results, management raised the financial guidance for FY2022. 

The company now forecasts revenues to grow by 23% to 25%, higher than the previously guided range of 18% to 20%. 

However, the company continues to forecast adjusted earnings in the range of $9.25 per share to $9.65 per share, which is lower than the consensus estimate, which is pegged at $9.77 per share.

AXP CEO’s Comments 

American Express CEO, Stephen J. Squeri, said, “We have been able to deliver exceptional results while navigating a complex macroeconomic environment because of a number of factors, including the scale and strength of our global customer base, the decisions we made through the pandemic and recovery to support our customers and seize on growth opportunities, and our continued focus on enhancing our value propositions and bringing new customers into the franchise.”

Looking confidently to the future, he further added, “As we look ahead, we remain confident in our ability to successfully execute against our long-term growth plan aspirations.”

Wall Street’s Take on AXP

Despite upbeat results, CFRA decreased the price target on American Express to $190 (24.17% upside potential) from $210 and reiterated a Buy rating.

The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 10 Buys and nine Holds. The average American Express price target of $175.67 implies 14.81% upside potential to current levels.

TipRanks’ Smart Score

AXP scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

Conclusion

Although AXP shares lost over 11% over the past year, they performed in-line with the benchmark indices.

The stock could be on the way to its upward trajectory as demand beat the pre-pandemic levels for the first time. The rebound in travel demand, as well as entertainment, resulted in strong revenue growth.

The positive demand indicators and resumed consumer credit card spending momentum bode well for the stock going forward.

Disclosure

Tired of arriving late to the Big Returns Party?​
Most investors don’t have major gainers like TSLA or NVDA on their radar from the start.
The profusion of opinions on social media and financial blogs makes it impossible to distinguish between real growth potential and pure hype.
​​For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate.​
Learn More
Videos