American Express Co (NYSE: AXP), a credit card company and travel services company, is preparing to release its 2020 third quarterly earnings report on Friday, October 23rd. American Express, as a group of companies, offers its services through Global Consumer Services Group, Global Commercial Services, Global Merchant and other services. The parent company was founded on March 28, 1850 by Henry Wells, William J. Fargo, and John Warren Butterfield. It is headquartered in New York.
The Zacks consensus estimate for earnings per share and third-quarter revenue is $ 2.48 per share and $ 36.66 billion, respectively, indicating a drop of 33.17% and 21.21% each from the figures reported for the previous quarter.
However, Yahoo Finance estimates earnings of $ 1.33 per share and Seeking Alpha estimates earnings of $ 1.35 per share with total revenue estimates of $ 8.71 billion. (1)
The company reported quarterly revenue of $ 6.12 billion and net profit of $ 0 in its latest earnings report released on June 30 2020. The company’s market capitalization is $ 81,667 billion. Earnings per share in the previous report beat market expectations of $-0.11, coming in at $ 0.29. (Finance.yahoo.com)
Important points to know
As one of the largest revenue streams of the company is provided through travel cards, we expect the largest drop in revenue to be due to fewer trips during the coronavirus epidemic. However, most of the company’s revenue comes from its discount cards, which are likely to fall sharply due to lower supplier fees and lower prices.
On the other hand, because the latest US stimulus package has not yet been approved, while consumers are waiting for it and hoping to receive cash checks in the coming months, they are possibly more likely to use more and new credit cards as well as renewing their previous cards. Therefore, the number of newly issued cards will also be interesting for investors.
And finally, in recent years, B2B payments for American Express, as well as MasterCard and Visa cards, have received more attention, and this part of the report should also be closely scrutinized.
American Express, in partnership with Coupa Pay, is also expanding the use of virtual cards in the United States. Both companies have been working together since 2019 and offer virtual card services in the UK and Australia. These cards are more secure than physical cards because the 16-digit card number is unique to each payment and is for single use only. Because it is not a physical card, it cannot be stolen or reused. Also, the card loses its validity once the amount on it has been spent. (2) Although the company’s new service is in the US market and will not affect third-quarter earnings, it could help them have a more positive outlook for Q4.
Summary
In the last three months, the financial sector in the US stock markets rose 2.66%, and the stock price of Amex rose 5.55% (on the last day of the third quarter, from $94.96, the price opened on the first day of July, to $100.24). See the image below from Finviz.com.
American Express is currently ranked #4 (SELL) at Zacks Investment Consulting. While the current consensus among 14 TipRanks analysts is to rank American Express stocks a HOLD. It is maintained, with an average price target of $ 102.57. The price targets of these analysts are from the highest price of $127 to the lowest level of $80. (3)
Technical overview:
The weekly chart has a lot to say. Like most financial companies, the current price of Amex is hovering around 50% of Fibonacci levels after a sharp drop in COVID-19 cases. In both weekly and daily charts, prices fluctuate between 20 and 100 averages. Immediate resistance is at $ 104.75 on the 100-week average , while bulls should see a price above $ 61.8% Fibonacci above $ 111 . On the other hand, the current price is very close to the weekly bit average at $ 100.45 , which is immediate support, the next level is at the lowest level in September and 38.2% Fibonacci, as the main support, the violation of this level, the bear market Helps to have more control.
- https://seekingalpha.com/symbol/AXP/earnings
- 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
- https://www.tipranks.com/stocks/axp/forecast
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Ahura Chalki
Market Analyst
Hot Forex
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