Can American Express (AXP) Q4 Earnings Beat on Higher Volumes?

American Express Company AXP is scheduled to report fourth-quarter 2021 results on Jan 25, before the opening bell.

The Zacks Consensus Estimate for AXP’s fourth-quarter earnings and revenues are pegged at $1.78 per share and $11.59 billion, respectively, indicating a rise of 1.1% and 24% each from the corresponding year-earlier reported figures.

Earnings Surprise History

American Express boasts an encouraging earnings surprise record. The bottom line beat estimates in all the last four quarters, the average surprise being 35.4%. This is depicted in the chart below:

American Express Company Price and EPS Surprise

American Express Company Price and EPS Surprise

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

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for American Express this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: American Express has an Earnings ESP of +2.72%.

Zacks Rank: American Express currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s see how things have shaped up prior to the fourth-quarter earnings announcement.

Factors to Impact Q4 Results

The year 2021 marks a transition phase for American Express after suffering clutched consumer spending in 2020. AXP is likely to have witnessed better volumes in the to-be-reported quarter, a trend that has been present for the past few quarters. Volumes of AXP are likely to have expanded owing to total network volumes and billed business volumes.

Travel and Entertainment, which saw a decline due to COVID-19, is also staging a comeback, particularly in the United States as the vaccine rollout accelerates. T&E is expected to have increased in the fourth quarter of 2021.

Fees and commissions and other revenue might have improved on the back of an uptick in travel-related revenues. The consensus mark for Revenue-other suggests an upside of 78.4% from the year-ago quarter’s reported figure.

Card acquisitions in some of AXP’s largest travel co-brand portfolios have increased since the fourth quarter of 2020. This indicates that travel remains an attractive category for consumers.
Thus, a rise in the overall spending level is likely to have inflated Discount revenues, AXP’s largest revenue driver.   

American Express’ net interest income, the second-largest revenue contributor, is likely to have risen on its higher loan disbursements. The consensus mark for AXP’s net interest income suggests an upside of 8.1% from the year-ago quarter’s reported figure.

Net card fee, the third-largest revenue catalyst, might have increased. AXP is likely to have issued more cards in the to-be-reported quarter as consumers continue to shop and spend.

Its margins are expected to have been weighed down by investments made to rebuild the growth momentum.

Other Stocks to Consider

Some other stocks worth considering from the finance sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

Euronet Worldwide, Inc. EEFT has an Earnings ESP of +0.50% and a Zacks Rank of 3, presently.

Virtu Financial, Inc. VIRT has an Earnings ESP of +8.25% and is Zacks #3 Ranked, currently.

Moody’s Corporation MCO has an Earnings ESP of +2.49% and is a #2 Ranked player at present.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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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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