Thu, Jan. 22, 9:32 AM
- American Express (NYSE:AXP) is lower by 3.3% after the company last night said it would eliminate 4K jobs (about 6% of the U.S. workforce). The company has been able to meet or beat bottom-line earnings estimates by controlling expenses, but has been falling short of its long-term revenue growth target of 8%.
- "Headwinds present a challenging environment for American Express," says Jefferies' John Hecht, noting the discount rate - what AmEx collects on each transactions from merchants - edged lower in Q4.
- As for costs last quarter, they rose 6% when adjusted for forex impacts, and though layoff announcements have neared 12K over the past two years, the overall headcount has remained relatively steady at between 61K and 63.5K since 2010.
- Previously: AmEx beats, reportedly planning thousands of job cuts (Jan. 21)
Wed, Jan. 21, 4:15 PM
- Q4 net income of $1.447B or $1.39 per share vs. $1.308B and $1.21 one year ago. Share count fell 4% Y/Y. ROE of 29.1% vs. 27.8%.
- U.S. Card Services net income of $665M down 23% Y/Y on revenue of $4.6B up 5%, with cardmember spending up 8%. Loss provisions of $399M up 25% thanks to a reserve build this year vs. a reserve release last year. Expenses of $3.1B up 13%.
- International Card Services net income of $33M down 68% Y/Y on revenue of $1.4B down 3% (FX adjusted). Expenses of $1.3B up 10% (FX adjusted).
- Global Commercial Services net income of $594M up from $182M a year ago.
- Global Network & Merchant Services net income of $417M up 5% Y/Y.
- Conference call at 5 ET. The company is reportedly planning thousands of job cuts this year - it took a $313M charge this quarter "to improve operating efficiencies."
- Previously: American Express beats by $0.01, beats on revenue (Jan. 21)
- AXP -1.4% after hours
Wed, Jan. 21, 4:10 PM
Tue, Jan. 20, 5:35 PM
Tue, Jan. 20, 3:36 PM
- "I can cut a lot of expenses and we can look pretty good for a year or two, but then our business goes away," said American Express (AXP +1.5%) CEO Ken Chenault recently. His comments speak to the fine line the company must walk to please both customers and its owners, some of who may be noticing AmEx common stock has lagged its main card-processing competitors Visa and MasterCard over the last one, three, and five years, writes Spencer Jakab in the WSJ.
- Wednesday's Q4 results (after the bell) are expected to show progress on the cost front and the benefit of a strong holiday season, with analysts expected EPS of $1.28, up from $1.21 a year earlier.
- The company's main profit center is still the U.S., with less than half of its cards in 2013, but generating a far higher proportion of so-called discount revenue from merchants that year.
- "Convenience and quality don’t come cheap - and still may not trump ubiquity," concludes Jakab.
Wed, Jan. 7, 7:35 AM
- Upgrading American Express (NYSE:AXP) to a Buy with $102 price target, analyst Ryan Nash says an improving macro should drive revenue upside. He also notes increased customer acquisition, share gains in lending, growth from a number of key long-term initiatives, and operating expense containment.
- His numbers are 2% higher than the Street for 2014, and 3% higher this year, and shares trade at 13.1x 2016 estimates vs. 15.3x for peers.
- The stock's higher by 1% premarket.
Dec. 18, 2014, 10:09 AM
- "We believe that American Express' (AXP +2%) recent broader inclusion initiatives are likely to take some time to develop and that top-line growth is likely to be constrained in the near term," says Jefferies, initiating coverage with a Hold and $95 price target.
- Initiatives like OptBlue and Serve look good over the longer-term, but come at a short-term cost which is likely to weigh on results in coming quarters. The $95 price target equates to about 15x the firm's 2016 EPS estimate - a warranted discount to peers thanks to AmEx's smaller scale and lower merchant acceptance, as well as credit risk exposure.
- Previously: AmEx initiated with Overweight rating at Morgan Stanley (Dec. 17, 2014)
Dec. 17, 2014, 9:52 AM
- Analyst Cheryl Pate expects accelerated U.S. card spend driven by 1) Ramping consumer spending, and 2) Higher merchant penetration through OptBlue. American Express (AXP +0.5%), she says, is highly leveraged to an improving economy and a higher stock market thanks to its "more affluent" client base.
- Opt Blue, she adds, offers a "meaningful value proposition" to small merchants which could result in AmEx narrowing the merchant gap with competitors.
- Alongside the Overweight rating is a $110 price target.
Dec. 10, 2014, 2:31 PM
- American Express (AXP -0.2%) CEO Ken Chenault is pleased with spending trends this season, and says Cyber Monday was the single largest billings day in company history.
- Presenting at the Goldman Sachs financial services conference, Chenault also gives the thumbs up to AmEx's participation thus far with Apple Pay. “Our cardmembers have a great affinity for Apple products and service. They are power users and, as you can expect, they are already highly engaged with Apple Pay."
- Presentation slides
Dec. 2, 2014, 2:59 PM
Nov. 26, 2014, 3:16 PM
- The partnership with Costco is particularly important for American Express' (NYSE:AXP) B2B franchise, says the team at Susquehanna, noting 75% of Costco spending is from its Executive Members, i.e. small business owners. AmEx's strength in small business cards thus owes a lot to the tie-up with Costco, according to the team, especially as AmEx tries to boost merchant "acceptance" (it currently ranks below Visa, MC, and Discover on that front).
- Previously: Costco ditches AmEx in Canada
Nov. 13, 2014, 9:49 AM
- Capital One (COF +0.8%) in an outlier to the upside in the credit card names in early action after Deutsche Bank initiates coverage on the stock with a Buy and $92 price target. American Express (AXP -0.2%) is started at Hold.
- Deutsche cuts Discover FInancial (DFS -0.4%) to Hold from Buy, citing valuation and high expectations for loan growth which the company could find tough to meet. CapOne, says Deutsche, offers a better risk/reward.
Nov. 10, 2014, 3:39 PM
- The lucrative prepaid card business may already getting less so thanks to the entrance of gorillas like JPMorgan (NYSE:JPM) and American Express (NYSE:AXP) into the industry, but alongside that threat is the CFPB.
- Unable to cap fees, the fast-expanding D.C. agency is set this week to propose new rules mandating clearer disclosure of fees, and to make it easier for consumers to compare across cards.
- “We’re generally in compliance with what we expect the regulation to be,” says Meta Financial (NASDAQ:CASH) President Brad Hanson, and he believes the better disclosure "helps legitimize the industry."
- Around 8% of U.S. households use prepaid cards, but that rises to 22% when just looking at those without bank accounts. Less than a $20B business six years ago, the amount put on prepaid cards should near $100B this year.
Nov. 5, 2014, 12:02 PM
- "We want to become the company that will put us out of business," says American Express (AXP +0.6%) chief Ken Chenault, speaking about the importance of competition and innovation at the Money 2020 conference in Las Vegas.
- "You have to have this spirit of reinvention, and that is what we have in the DNA of the company, ... if you don't innovate, you die. You have to constantly innovate, you have to constantly challenge the status quo."
- On whether Apple might one day do an end run around card processors: "Does Apple want to be involved in credit and all that goes with that ... I don't think so."
- On the pending launch of Current C - a mobile app connecting to a rival network (Merchant Customer Exchange) created by a group of major retailers: "We still don't know what Current C will consist of," he says, reminding that what merchants really want is to grow sales and will Current C provide shoppers with the right incentives to do so.
Oct. 31, 2014, 8:35 AM
- American Express (NYSE:AXP) looks set to escape the full force of the new measures, reports Bloomberg, as it would only have to comply with the fee caps when it works with other companies to issue cards.
- The proposal being circulated would cap interchange fees on cross-border debit-card payments at 0.2% and credit-cards at 0.3%. For domestic debit-card payments, the plan gives nations the options of calculating the 0.2% cap against the value of individual transactions, or against the "annual average transaction value."
- According to the proposal, AmEx and other three-party systems would be affected only when they have licensing agreements with other providers - a model accounting for about 9% of the firm's business, according to EU data.
Oct. 20, 2014, 3:31 PM
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