What's in Store for American Express (AXP) in Q3 Earnings?
American Express' (AXP) Q3 results are likely to show an increase in earnings and revenues.
American Express Co. AXP is scheduled to report third-quarter 2021 results on Oct 22, before the opening bell.
The Zacks Consensus Estimate for the company’s third-quarter earnings and revenues is pegged at $1.77 per share and $10.56 billion, respectively, indicating a rise of 36.15% and 20.67% each from the corresponding year-earlier reported figures.
Factors to Impact Q3 Results
The year 2021 marks a transition phase for the company after suffering clutched consumer spending in 2020. Overall spending on American Express cards was consistent for the last four quarters, a trend that most likely continued in the to-be-reported quarter as well since restrictions were relaxed and consumer confidence received a boost.
Travel and Entertainment, which saw a decline due to COVID-19, is also staging a comeback, particularly in the United States as the vaccine rollout accelerates. The company’s revenues took a hit in the recent quarters as T&E receded because it contributes handsomely to the top line. With the unwinding of pent-up demand for consumer travel, spending in this category is expected to have driven total revenues.
Card acquisitions in some of the company’s largest travel co-brand portfolios have increased since the fourth quarter of 2020. This indicates that travel remains an attractive category for consumers.
Thus, an increase in the overall spending level is likely to have inflated Discount revenues, the company’s largest revenue driver.
Its net interest income, the second-largest revenue contributor, is likely to have risen on higher loan disbursements by the company. Recent data showed that consumer borrowing shot up as people became more confident about their ability to pay loans.
The third largest revenue catalyst, which is the net card fee, might have increased. The company is likely to have issued more cards in the to-be-reported quarter as consumers continue to shop and spend.
Its margins are expected to have been weighed down by investments made to rebuild growth momentum.
Earnings Surprise History
The company boasts an encouraging earnings surprise record. Its bottom line beat estimates in three of the last four quarters and missed the mark in the remaining one, the average surprise being 26.88%. This is depicted in the chart below:
American Express Company Price and EPS Surprise
Here is what our quantitative model predicts:
Our proven model predicts an earnings beat for American Express this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: American Express has an Earnings ESP of 3.45%.
Zacks Rank: American Express currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Some other stocks worth considering from the finance sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
Discover Financial Services DFS has an Earnings ESP of +2.25% and a Zacks Rank of 3, presently.
Synchrony Financial SYF has an Earnings ESP of +3.74% and is Zacks #3 Ranked, currently.
Capital One Financial Corporation COF has an Earnings ESP of +11.55% and is a #3 Ranked player at present.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.Today, Download Marijuana Moneymakers FREE >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Discover Financial Services (DFS): Free Stock Analysis Report
Capital One Financial Corporation (COF): Free Stock Analysis Report
American Express Company (AXP): Free Stock Analysis Report
Synchrony Financial (SYF): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research