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Credit card power house and Dow-30 component American Express (AXP Free American Express Stock Report) has released better-than-expected June-period financial results. For the interim, although revenues were slightly below our estimate, the share-earnings tally of $1.27 beat our call by a couple of pennies. In addition, the results were 10.4% better than 2012's like period. The solid showing mostly stemmed from higher cardmember spending and growth in the cardmember loan portfolio, which led to greater net interest income.

Diving deeper into the June performance, total revenues were $8.2 billion, up 4%, year over year. Cardmember spending expanded 7%. The consolidated provision for loan losses totaled $593 million, up 29%. The sharp increase reflected lower reserve releases and were partially offset by reduced net write-offs. At this time, in our view, the provision for loan losses is at a very manageable level, which can be attributed to Amex's affluent customer base.

Looking ahead, we continue to like American Express' prospects. Although there are still economic concerns, both at home and abroad, we anticipate that cardmember spending will continue to increase at a healthy rate over the next several years. Furthermore, Amex's customers generally possess good credit scores, so loan losses should remain in check. Continued, gradual improvements in the U.S. housing and job markets would also benefit the company's top and bottom lines.

For 2013, we are adding a nickel to our share-earnings estimate, which now stands at $4.90. That would represent an 11% increase from 2012's tally. Looking to next year, we are reiterating our bottom-line call of $5.30. Further out, we project that earnings will exceed $6.60 a share by the 2016-2018 period.

As for the stock, it has performed very well of late. In fact, year to date, it is up more than 35%. In comparison, the Dow Jones Industrial Average has advanced 18% over the same timeframe. Thus, at this time, we think that Amex shares are fairly valued. That said, we continue to believe that this issue would make a fine addition to equity portfolios with a conservative, long-term approach.

About The Company: Established in 1850, American Express Company  has grown to become a leading global payments, network, and travel firm. It operates through multiple business segments, including the Global Consumer Group and Global Business-to-Business Group. The company sold its AMEX Life business in October of 1995 and its American Express Bank in February of 2008. In mid-1994, it spun off Lehman Brothers to shareholders and ten years later, did the same with American Express Financial Advisors.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.