- American Express is down $10 a share from our entry price. Nevertheless we are staying the course and holding this stock long term.
- We will not be shorting stocks in our 1% portfolio. There are many more "long" millionaires than "short."
- Our new position, BND, is performing well. It will be a good anchor for our portfolio as its volatility seems to be very low.
American Express Not Dead Yet, Looks Very Cheap Here
- AXP reported results on Wednesday night and disappointed investors.
- The company announced 4,000 layoffs in a surprise move and took a huge build against future credit losses.
- I still like AXP as the stock is very cheap despite the negatives from the quarter.
Update: American Express - Don't Throw This Credit Card Company Away Just Yet
- American Express has produced a negative stock return of 3% over the last twelve months.
- My long-term investment thesis from last year revolved around two themes: Strong revenue/billed business growth and a low valuation.
- American Express' fourth-quarter results confirm my investment thesis, even though the stock has underperformed my expectations.
- Looking forward, the potential for revenue and valuation growth remains attractive.
- American Express recently released its 4th quarter earnings.
- The company grew EPS 14% for full fiscal 2014, thanks in part to the Concur Technologies gain.
- American Express is offering investors a total return going forward of between 8% and 11% a year.
American Express' Shares Are Falling Following Its Q4 Earnings Beat - Should You Buy Now?
- Q4 2014 earnings were released on January 21.
- Earnings per share and revenue beat expectations.
- Card Member spending increased 6%.
- The stock has responded by falling about 2%.
- The whisper number is $1.39, one cent ahead of the analysts' estimate.
- Amex has a 51% positive surprise history (having topped the whisper in 20 of the 39 earnings reports for which we have data).
- The overall average post earnings price move is 'positive' (beat the whisper number and see strength, miss and see strength) when the company reports earnings.
- AXP's customer base continues to spend freely.
- AXP's earnings base is growing strongly each year and industry tailwinds are aiding as well.
- The company's cheap relative and absolute valuations make it a buy.
- American Express is having a difficult time adapting to new realities in the world of payment processing.
- Costco’s decision to drop Amex in Canada shows how inflexible and old fashioned the credit card can be.
- American Express’s inability to develop a mass market card may drive Costco to switch to Capital One.
- American Express is now a niche player in the credit card industry, and that niche could shrink.
- Costco could drop American Express because it needs the middle class customers Amex does not serve.
- This article investigates American Express based on its fundamental attributes and expected earnings growth to create a 12-month target price for its shares.
- Neither the firm's dividend policy nor its balance sheet is particularly impressive, and analysts anticipate annual earnings growth will decline into the single digits over the next five years.
- As a result, American Express shares look to be significantly overvalued at their current price and although Warren Buffett still thinks highly of the company, this model does not agree.
- AXP is suitable for the Enterprising Investor but not the Defensive Investor, following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is undervalued at the present time.
- The market is implying 5.15% earnings growth over the next 7-10 years, which is significantly less than the rate the company has seen in recent years.
Don't Be Deceived - American Express Is Too Pricey
- American Express deserves a premium for its global brand name and solid balance sheet.
- However, organic growth has stalled and EPS is being goosed by expense cuts and buybacks.
- The current price feels like investors are buying American Express as a "safe" stock without examining valuation.
- Investors should dump American Express and look elsewhere.
American Express: Direct Beneficiary Of Growth In The Credit Card IndustryBalanced Investing • Oct. 28, 2014
- American Express reported a growth of 5% in its top line in the most recent quarter and clocked in absolute revenue net of interest expense of $8,329 million.
- The company has increased its net profit margin to 17.73% in the third quarter of the fiscal year 2014, an improvement of 127 basis points.
- On a per share basis, the EPS is projected to go up by $0.49 due to the growth in the credit card industry in 2014.
- With the addition of American Express to provide Apple Pay service, this is expected to provide an additional source of top line growth for the company in upcoming quarters.
- The company’s improved financial and credit performance coupled with the forthcoming industry growth where American Express has a significant market share, the stock provides a good opportunity for investment.
American Express: Mixed Results But Still A Decent Investment
- American Express posted mixed results.
- There was modest growth in revenues and net income.
- The share price is nearing a compelling valuation.
- The stock beat on earnings expectations but missed on revenue.
- The stock appears to be inexpensively valued on 2015 earnings estimates.
- I will more than likely be buying the stock when starting up the new IRA account.
- The whisper number is $1.38, two cents ahead of the analysts' estimate.
- Amex has a 50% positive surprise history (having topped the whisper in 19 of the 38 earnings reports for which we have data).
- The overall average post earnings price move is "opposite" (beat the whisper number and see weakness, miss and see strength) when the company reports earnings.
American Express: Earnings Miss Around The Corner
- A number of one time/special gains are coming to an end.
- Expectations are for accelerated growth but more likely to see deceleration.
- With shares trading at a full multiple the downside move could be brisk.
American Express: Transforming Commerce And Making Members Truly Mobile
- American Express has strategically placed itself as the top player in 'future' card services.
- We are forecasting 4.5% growth but can see that accelerating with the new 'truly mobile' push.
- The business is currently trading at our fair value, but is one to watch - especially when the market turns.
- Apple Pay has the ability to drive massive growth at American Express, especially if Serve functionality is available.
American Express Hopes Consumers Continue To Spend
- American Express's profits correlate strongly to trends in both economic growth and consumer credit.
- With the Federal Reserve looking to raise rates over the next year, consumer spending could begin to decline.
- With a falling dividend payment, investors may find little reason to hold the company's stock if its share price begins to decline.
Jan. 14, 2014, 9:30 AM| Comment!
Dec. 24, 2013, 10:08 AM
- It's expected, reports the WSJ, American Express (AXP +0.3%) will pay a fine to regulators as well as refunds to customers over slyly charging for add-on products like identity theft protection.
- The CFPC, OCC, and FDIC are expected to join the settlement.
- Update at 10:22: The FDIC, joined by the CFPB and the OCC, announce a settlement with AMEX. It's looking like $7.2M in fines and no less than $40.9N in restitution to AMEC customers.
Dec. 19, 2013, 4:30 PM
- U.S. merchants had filed suits over American Express' (AXP) card acceptance agreements. The settlement, says AMEX, addresses certain merchant concerns, and assures AMEX members will be treated fairly at the point of sale. The suits date back nearly 10 years.
- AMEX will pay attorney fees up to a maximum of $75M, plus another $4M to go to the plaintiffs.
- Merchants agree not to surcharge AMEX customers any more than that charged for cards on competing networks.
- Press release
Dec. 17, 2013, 4:19 AM
- The Fed intends to use its own estimates about the effect of a recession on bank balance sheets in its stress tests. Previously, the Fed has relied on data from the firms themselves.
- The central bank could project that bank assets would grow during a slump, as has happened in the past three recessions, rather than fall, as the banks have predicted.
- With such a finding, the Fed could require banks to hold more loss-absorbing capital or limit shareholder payouts. (Fed letter)
- Tickers: GS, JPM, BAC, BK, AXP, COF, C, FITB, MS, PNC, RF, STT, STI, USB, WFC.
- ETFs of interest: KBE, KBWB, KRE, KCE, KBWC, XLF, IYF, PFI, VFH, RYF, RWW, FAS, UYG, FAZ, SKF, SEF, IAI, FXO, PSCF, KBWD, KBWB, IYG, FINU, FINZ.
Nov. 27, 2013, 1:42 PM
- American Express (AXP +0.4%), Discover (DFS +0.3%), U.S. Bancorp (USB +0.2%), and Wells Fargo (WFC -0.1%) are best positioned to be allowed large capital returns (about 70%) after the Fed's early 2014 stress tests, says Credit Suisse's Moshe Orenbuch, while Ciitgroup (C +0.2%) and PNC Financial (PNC +0.9%) are likely to show the biggest improvement from last year.
- Overall, his team expects large cap bank capital returns to be 65% next year vs. about 48% in 2013. The median dividend payout ratio is expected at 22%, level with this year.
- Orenbuch notes the CCAR will be tougher this time around - notably by assuming a global, not just domestic meltdown, and assuming a significant reversal in the property market - with commercial real estate exposure particularly harshly judged.
- Balanced against that and likely winning, however, are far stronger capital positions of the banks, says Orenbuch.
- Financial and banking ETFs: FAS, XLF, FAZ, UYG, KRE, KBE, VFH, IYF, IPF, SEF, IAI, IAT, IYG, FXO, PFI, IXG, KBWB, RKH, QABA, KCE, FINU, RWW, KRU, RYF, KBWR, AXFN, PSCF, KRS, FNCL, FINZ, KBWX, KBWC
Nov. 20, 2013, 10:04 AM| Comment!
Nov. 19, 2013, 12:31 PM
Nov. 5, 2013, 12:48 PM
- New CCAR guidelines are largely inline with last year, says the team at Credit Suisse, but some variables pose more onerous assumptions and could keep capital distributions more conservative than otherwise expected, though still improved from last year.
- The incorporation of a large counterparty default scenario is particularly of note for those banks with material trading and custodial operations. The bar for CCAR passage is thus raised for: BAC, BK, C, GS, JPM, MS, STT, and WFC.
- Additionally, the weakening of economic activity in the severely adverse scenario appears worse than last year. Also included is a reversal in the recent improvement in U.S. housing and the European economy.
- Those best-positioned for excess capital deployment: AXP, HBAN, KEY, NTRS, RF, and USB. Bank of New York, Goldman, State Street, and Wells Fargo all have the honor of ending up on both lists.
- ETFs: KBE, KBWB.
Oct. 17, 2013, 8:54 AM
- "There is just nothing in our data that would support any particular impact amongst our customer base in what they spend money on from the economic turmoil," said American Express (AXP) CFO Jeff Campbell, responding to an earnings call (transcript) question about the government shutdown.
- The upbeat tone of Campbell's remarks (not just in this question, but overall) contrasts with the "lackluster" macro picture described by eBay after its soft revenue and light guidance.
- AXP +0.2% premarket.
Oct. 16, 2013, 4:24 PM
- Total cardmember spending rose 7% Y/Y (9% after currency translations).
- U.S. Card Services net income of $782M up 12% Y/Y, with 8% increase in cardmember spending and a rise in interest income thanks to 4% growth in card loans. Provisions for lesses of $331M off 2%. Expenses of $2.7B up 4%, reflecting higher rewards and marketing costs.
- International Card Services net income of $142M is off 13% Y/Y, with revenues higher by 8% adjusted for currency translations. Drop in income comes from a 36% increase in loss provisions to $113M.
- Global Commercial Services net income of $261M up 43%, on 6% higher revenues.
- Global Network & Merchant Services net income of $391M up 9% on 7% higher revenues, adjusted for currency translations.
- AXP +0.3% AH.
- Conference call at 5 ET.
- Q3 results, press release.
Oct. 16, 2013, 4:02 PM
Oct. 16, 2013, 12:10 AM
Oct. 15, 2013, 5:35 PM
Oct. 15, 2013, 12:33 PM| Comment!
Oct. 4, 2013, 1:04 PM
- Despite expenses moving in the wrong direction and what he expects will be a declining trend in earnings, Capital One (COF +1.7%) is KBW's Sanjay Sakhrani top pick among the credit card lenders. Even with Q3 EPS expected at $1.78 vs. $2.01 a year ago, CapOne still trades at 10.1x 2014 consensus P/E - low for a stock with return on tangible common equity of nearly 18%, he says.
- The far-better performing (stock-price wise) Discover (DFS +0.3%) - trading at 10x 2014 earnings - is also rated a Buy as Sakhrani sees plenty of room for boosted buybacks. He predicts $350M of repurchases in Q3 vs. $340M in Q2, and a total of $1.3B for all of 2013.
- Though relatively pricey at 13.8x 2014 consensus P/E, American Express (AXP +0.1%) is also rated a Buy thanks to its long history of double-digit ROE (it was 23.6% in H1, down from 26.6% a year ago).
Sep. 25, 2013, 8:51 AM
- American Express' (AXP) corporate travel business gets a jolt with the announcement of a joint venture with an investor group led by Certares into which will be folded AMEX"s Global Business Travel Division.
- AMEX will own 50% of the JV, with the Centares Group investing $700M-$1B and owning the other half. The transaction is expected to close in 2014 Q2, and AMEX expects to recognize a gain at that time.
- "We anticipate that the expansion of our business travel offerings will not only help us grow GBT, but it would also provide additional value to our corporate payments customers ... We believe this structure will provide superior opportunities for delivering customer benefits, retaining world-class talent and achieving long-term success.”
- Press release.
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