American Express Q3 2024 Earnings Report

American Express (NYSE: AXP) reported robust financial results for the third quarter of 2024, with earnings per share reaching $3.49 and revenues of $16.6 billion, marking an 8% increase year-over-year. The company has raised its full-year EPS guidance to between $13.75 and $14.05, up from the previous range of $13.30 to $13.80, with revenue growth expectations around 9%.

Key Takeaways

• Q3 EPS: $3.49
• Revenue: $16.6 billion (8% YoY increase)
• Full-year EPS guidance raised to $13.75-$14.05
• Revenue growth expectation: ~9%
• 10th consecutive quarter of record revenues

Company Outlook

• Anticipates 9% revenue growth for the full year
• Projects Q4 trends to mirror Q3 performance
• Expects gradual increase in marketing and technology spending into 2025
• Maintains focus on product refreshes and customer engagement

Bullish Highlights

• 10% year-over-year growth in total loans and card member receivables
• Net card fees rose 18% due to successful product refreshes
• Net interest income increased by 17%
• Acquired 3.3 million new cards in Q3
• Strong credit performance with low delinquency rates
• Write-off rates declined to 1.9%

Bearish Highlights

• Provision expense of approximately $1.4 billion, including a $264 million reserve build
• Challenging macro environment impacting organic spend, particularly in small businesses

Misses

• Expenses related to customer agreements and co-brand partnerships not growing as expected due to lower billing levels

Q&A Highlights

• Customer migration between card tiers shows increased spending with higher-tier cards
• Net interest income dynamics discussed, emphasizing slight liability sensitivity
• Restaurant spending remains strong, especially among Millennials and Gen-Z
• International travel bookings reached pre-pandemic levels

American Express's Q3 2024 performance demonstrates continued growth and resilience in the face of economic challenges. The company's strategy of product refreshes and focus on key spending categories like dining and travel appears to be paying off, with strong growth in net card fees and customer acquisition.

The company's success in attracting Millennial and Gen-Z consumers, particularly with the refreshed Gold Card, positions it well for future growth. The acquisitions of Resy and Tock are expected to further enhance dining offerings and connect premium customers with merchants.

Despite some headwinds in the form of increased provision expenses and challenges in the small business sector, American Express maintains a positive outlook. The raised full-year guidance reflects confidence in the company's ability to navigate the current economic landscape while continuing to invest in marketing and technology.

The company's focus on maintaining strong yields and managing expenses effectively, coupled with robust credit performance, suggests a solid foundation for future growth. As American Express moves into Q4 and prepares for 2025, it aims to balance continued investment with sustainable earnings growth.

InvestingPro Insights

American Express's strong Q3 2024 performance is further supported by data from InvestingPro. The company's market capitalization stands at an impressive $197.36 billion, reflecting investor confidence in its growth trajectory. This aligns with the company's raised full-year EPS guidance and robust revenue growth expectations.

InvestingPro Tips highlight American Express's financial strength and market position. The company has maintained dividend payments for 54 consecutive years, demonstrating its commitment to shareholder returns even in challenging economic environments. This is particularly noteworthy given the current economic uncertainties mentioned in the earnings report.

Moreover, American Express is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.58. This suggests that the stock may be undervalued considering its growth prospects, which could be attractive for investors looking at the company's raised guidance and positive outlook.

The company's revenue growth of 9.62% over the last twelve months, as reported by InvestingPro, closely aligns with the 8% year-over-year increase mentioned in the Q3 results and the projected 9% growth for the full year. This consistency in growth rates underscores American Express's ability to maintain its growth trajectory.

It's worth noting that InvestingPro offers 12 additional tips for American Express, providing investors with a more comprehensive analysis of the company's financial health and market position.