American Express (AXP) is currently under the spotlight as stock market enthusiasts keep a close eye on its performance. Notably, the credit card issuer and global payments company has seen its shares drop by 10.9% over the past month, a dip that starkly contrasts with the Zacks S&P 500 composite's 7.5% change. This decline is also significant within the context of its sector, as the Zacks Financial - Miscellaneous Services industry faced a loss of 10.7% in the same timeframe.
The pressing question many investors are asking is: what does the future hold for American Express stock?
At Zacks, analysts focus heavily on earnings estimate revisions to ascertain a stock's value and future performance. This emphasis stems from the belief that a company's future earnings trajectory directly influences its stock's fair value. Historically, an upward revision in earnings estimates often triggers investor interest in buying shares, ultimately pushing stock prices higher. For the current quarter, American Express is expected to report earnings of $3.47 per share, which marks a 4.2% increase from the corresponding quarter last year. However, it's worth noting that the Zacks Consensus Estimate has dropped by 0.6% over the past 30 days.
Looking ahead to the current fiscal year, the consensus earnings estimate rests at $15.30 per share, reflecting a robust 14.6% increase over the previous year, with a slight adjustment downward of 0.1% in the last month. Following that trend, for the next fiscal year, analysts estimate earnings will rise to $17.57 per share, which indicates a change of 14.9% from the expected results of the current year.
American Express’s ability to generate revenue is just as critical as its earnings growth. With this in mind, the consensus sales estimate for the current quarter is projected at $17.02 billion, which represents a 7.7% increase from last year. When looking at the estimates for the current and next fiscal years, they are pegged at $71.59 billion and $77.52 billion, signifying growth rates of 8.6% and 8.3%, respectively.
In their most recent reporting quarter, American Express announced revenues of $17.18 billion, indicating an 8.7% year-over-year improvement. Earnings per share for that period stood at $3.04, significantly higher than the $2.62 recorded a year earlier. The result was a minor revenue surprise of 0.01%, alongside a positive earnings surprise of 0.33%. Impressively, American Express has consistently surpassed consensus earnings projections in each of the last four quarters while beating revenue estimates twice in that duration.
Valuation is another essential aspect for investors to consider. An accurate investment decision hinges on whether a stock price aligns with the intrinsic value of the business and its growth potential. The Zacks Value Style Score, which evaluates both standard and unconventional valuation metrics, assigns American Express a grade of C. This score implies that the stock is valued similarly to its peers.
In light of these factors, it remains crucial for investors to weigh the current market buzz surrounding American Express against these underlying fundamentals. With a Zacks Rank of #3 (Hold), the outlook suggests that American Express may maintain a performance level consistent with the broader market in the near term.
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As of March 21, 2025, American Express has managed to keep its standing while navigating the tricky waters of the financial markets. The deterioration in share prices may be a concern, but the company's consistent ability to outperform earnings estimates and solid revenue growth provides a potential silver lining.
Investors are poised to keep an eye on American Express to assess whether its stocks will rebound or continue to slide, making any necessary adjustments to their portfolios accordingly.