American Express (AXP) Q1 earnings are better thanks to higher revenues

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American Express Co. AXP reported Q1 2021 earnings of $2.73 per share, which beat Zacks’ consensus estimate of 12.3%. However, net income was down 0.4% year-on-year.

For the quarter under review, AXP’s total revenue net of interest expense increased 29% year-over-year to $11.7 billion, driven by higher cardholder spending . The top line beat the Zacks consensus estimate by 0.4%.

The strong results for the first quarter of 2022 are the result of continued commercial momentum and a solid source of revenue. American Express also benefited from better volumes during the quarter under review. AXP added 3 million proprietary cards during the quarter. Travel and entertainment spending increased 121% year-over-year on a currency-adjusted basis.

American Express Company Price, Consensus, and EPS Surprise

American Express Company price-consensus-eps-surprise-chart | American Express Company Quote

Outlook

American Express reaffirmed its previously announced guidance of 18-20% revenue growth and earnings per share in the $9.25-$9.65 range. The consensus mark for AXP’s earnings per share is $9.74.

1st quarter operational performance

Thanks to higher spending, network volumes jumped 30% year-over-year to $350.3 billion in the first quarter.

Provision for credit losses was a profit of $33 million compared to a provision profit of $675 million a year ago.

Total spend of $9.1 billion was up 34% year-over-year, primarily due to higher customer engagement costs, net gains on equity investments from Amex Ventures in the prior year and the increase in compensation expense in the current quarter.

Q1 sector performance

The Global Consumer Services Group segment reported pretax profit of $1.7 billion for the first quarter, down 19% year-over-year. Total revenue net of interest expense rose 27% year-over-year to $6.9 billion, driven by increased cardholder spending.

The Global Commercial Services segment generated pretax profit of $804 million, which increased 19.1% year-on-year despite a 24% increase in expenses. Total revenue net of interest expense was $3.5 billion, up 31% year-over-year due to increased cardholder spending.

The Global Merchant and Network Services segment reported net income before tax of $687 million, which increased 78.4% year-on-year despite a 1% increase in costs. Total revenue net of interest expense increased 30% year-over-year to $1.4 billion, primarily due to network volume growth.

Corporate and others reported a pretax loss of $514 million in the first quarter, higher than the year-ago pretax loss of $212 million due to net gains on Amex Ventures equity investments.

Balance sheet (as of March 31, 2022)

American Express ended the first quarter with cash and cash equivalents of $28 billion, which increased sequentially by $22 billion. As of March 31, 2022, AXP’s long-term debt was $38 billion, compared to $39 billion at the end of 2021.

Zacks Rank and other companies with a favorable combination

Just as AXP – currently carrying a Zacks Rank #3 (Hold) – beat its Q1 earnings, here are a few other financial companies worth considering because they also have the right mix of things. to beat on profits this time around:

ProAssurance Corporation PRA currently has a +27.54% Earnings ESP and a #2 Zacks Rank. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks’ consensus estimate for ProAssurance’s net income for the reporting quarter indicates a 325% improvement over the reported figure for the prior year period. PRA has seen an upward revision in estimates over the past 30 days. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

central space CSR has a +2.51% earnings ESP and is a #2 ranked Zacks player.

Zacks’ consensus estimate for Centerspace’s earnings per share for the quarter ahead is set at $1.06, implying an 11.6% improvement from the year-ago figure of 95 cents. CSR has seen an upward revision in estimates over the past 60 days.

Southern State Corporation SSB has a +1.97% earnings ESP and is a #2 ranked Zacks player.

Zacks’ consensus estimate for SouthState’s net income for the quarter ahead improved 4.8% over the past 30 days. SSB’s earnings have exceeded estimates in each of the past four quarters, averaging 24.74%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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