American Express Q3 earning Report

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No one’s expecting any surprise!

By: Ahura Chalki

American Express Co (NYSE: AXP), A credit card products and Travel-Related services company, preparing to issue the 3rd quarter earning report of 2020, on Friday 23. Oct. AXP as a group of companies, provides its services, through Global Consumer Services Group, Global Commercial Services, Global Merchant and Network Services, and Corporate & Other. The main company was founded by Henry Wells, William G. Fargo, and John Warren Butterfield on March 28, 1850. Headquartered is in New York, NY.

The Zacks Consensus Estimate for the company’s third-quarter earnings and revenues is pegged at $2.48 per share and $36.66 billion, respectively, indicating a plunge of 33.17% and 21.21% each from the prior-year quarter’s reported figures.

However, Yahoo Finance estimate for EPS is $1.33 and Seeking Alpha’s estimate for EPS is $1.35 with a Revenue Estimate of $8.71B. (1)

In its latest earnings report, released on 06/30/2020, the company reported quarterly revenue of $6.12 billion and a net profit of $0. The company’s market cap is $81.667 billion. EPS beat the expectations by $0.40, realized at $0.29 (Finance.yahoo.com)

Important Factors which we have to know


As one of the largest revenue of the company is coming from travel card services, due to fewer travels during a pandemic, we do expect that revenue share from this part will be most hit, however, largest revenue of the company is its Discount Revenue, which likely because of lower fees and commissions from suppliers, must be fallen sharply.

On the other hand, as the latest stimulate package of the US is not issue yet, while consumers waiting for that and hoping to get checks in the next months, most probably will help the company in new and renewed credit cards. So, the numbers of newly issued cards also will be interesting for investors.

And finally, in past years, B2B payment for American Express as well as MasterCard and Visa, getting more interested and this part of the report also must be closely watched.

Also, “American Express is extending the usage of virtual cards in the United States, in collaboration with Coupa Pay. Both the companies have been in partnership since 2019, and have been providing virtual card services in the U.K. and Australia. These cards provide much more security than physical cards since the 16-digit card number is unique for each payment and is for single use only. Since the card is not physical, it cannot be stolen or re-used. The card also expires once the maximum amount available on it has been spent.” (2) Even though this is a new service of the company in the US market and will not affect third-quarter revenue, however, can help them in a more positive outlook for Q4.

Summary


In the past three months, the financial sector in US stock markets rose by 2.66%, and Amex Stock price rose by 5.55% (Up to $100.24 on the last day of the third quarter, from $94.96 of July first opening price). Check the below figure from Finviz.com.

American Express currently has a Zacks Rank #4 (Sell). While the current consensus among 14 “TipRanks” analysts is for a Hold rating of shares in American Express, with an average price target of $102.57. The analyst’s price targets range from a high of $127 to a low of $88. (3)

Technical overview:


The weekly chart has a lot to say. Same as most financial companies, the current price of Amex also pivoting around 50% of a Fibonacci level, after a sharp decline caused by COVID-19. In both Weekly and Daily charts, the price moves between 20 and 100 MAs. Immediate resistance sits at 100 Weekly MA at $104.75, while bulls need to see the price above 61.8% of Fibonacci above $111. On the flip side, the current price is so close to immediate support at 20 weekly MA at $100.45, under that September low and 38.2% Fibo is the key support, breaching under this level, will help the market bears to have more control.

  1. https://seekingalpha.com/symbol/AXP/earnings
  2. https://www.zacks.com/stock/news/1078927/amex-axp-and-coupa-pay-extend-virtual-cards-usage-in-us?art_rec=quote-price_consensus_eps_surprise_chart-zacks_news-ID02-txt-1078927
  3. https://www.tipranks.com/stocks/axp/forecast

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