Amex Stock AXP Record Revenues Q2 23 Growth By Card Spending

Trading News - American Express (NYSE: AXP) has reported a notable rise in its financials for the second quarter of 2023, delivering its fifth consecutive quarter of record revenues and earnings per share. This marks a growth of 12% over the previous year, driven by increased average loan volumes and an upswing in card member spending.

The credit card company's total network volumes climbed to $426.6 billion, up 8% from last year. Net of interest expense, the total revenues reached a record $15.1 billion, up 12% from the previous year, with net income of $2.2 billion, an 11% increase year over year. The diluted earnings per share (EPS) have also grown, rising from $2.57 in 2022 to $2.89 in 2023, a 12% increase.

(NYSE: AXP) Stock Performance Overview
the company's stock closed at $170.22, marking a decrease of 3.89% for the day. Despite the day's decrease, the performance throughout the quarter remained stable, with a 52-week range of 130.65 - 182.15. The company’s stock opened the day at $172.17 with an average volume of 2,948,838. The market cap of American Express stood at $126.514B. The PE Ratio (TTM) was 17.86, and the EPS (TTM) was 9.53. The company's forward dividend & yield were at 2.40 (1.36%). The ex-dividend date was July 06, 2023, and the company's earnings date is set for Oct 19, 2023 - Oct 23, 2023. The 1-year target estimate for the company is $186.00

Card member spending has been a significant driving factor behind these substantial numbers, marking an all-time high with an 8% growth on an FX-adjusted basis. This increase was propelled mainly by double-digit growth in U.S. Consumer and International Card Member spending. In addition, Travel and Entertainment spending sustained robust performance across all customer categories and regions, registering a 14% increase on an FX-adjusted basis.

Furthermore, the quarter saw reservations on the company's Resy restaurant platform and bookings through the consumer travel business reach their highest levels since the start of the pandemic, indicating a strong resurgence in these sectors. This shows a solid recovery and a potential return to pre-pandemic spending habits for cardholders.

A considerable part of the success can also be attributed to the strong demand for premium products, with over 70% of new accounts acquired in the quarter being fee-based. This demand was driven mainly by millennial and Gen Z consumers, who represented over 60% of new consumer accounts received globally. Notably, spending by this demographic in the United States increased by 21% over the prior year, showcasing the growing influence of this consumer segment.

American Express (NYSE: AXP) remains a leading player in the credit performance sphere, largely thanks to its premium customer base and its continued risk-management decisions. Consolidated provisions for credit losses were reported to be $1.2 billion, compared to $410 million a year ago, reflecting higher net write-offs and a net reserve build of $327 million, compared to a net reserve build of $58 million last year.

The company's partnerships also play a critical role in delivering unique customer value. In a recent development, American Express (NYSE: AXP) extended its partnership with Hilton, its first and longest-standing co-brand partner, into 2033. Under this agreement, American Express (NYSE: AXP) will continue as the exclusive issuer of Hilton consumer and small business credit cards in the United States.

Considering the results to date, the company is reaffirming its full-year 2023 guidance in January, predicting revenue growth of 15% to 17% and an EPS of $11.00 to $11.40. This demonstrates the company's commitment to achieving its longer-term growth aspirations in a steady-state environment.

In addition to the overall company performance, the report also sheds light on the performance of specific segments. For instance, the U.S. Consumer Services reported a second-quarter pretax income of $1.3 billion, consistent with the previous year, driven mainly by higher average loan volumes and increased Card Member spending. Meanwhile, Commercial Services reported second-quarter pretax income of $713 million, compared with $778 million a year ago, with an increase driven in part by higher average loan volumes.

Global Merchant and Network Services reported a second-quarter pretax income of $963 million, compared with $802 million a year ago. This growth is primarily a reflection of higher merchant-related revenues. On the other hand, Corporate and Other reported a second-quarter pretax loss of $445 million, showing an improvement from a pretax loss of $493 million a year ago.

The impressive performance of American Express (NYSE: AXP) in this quarter serves as a solid testament to the resilience and adaptability of its business model amid volatile market conditions. The reported net income of $2.2 billion underscores the robust spending habits of card members, further contributing to the company's growth.

The growth in card member spending also aligns with broader market trends as consumers increasingly turn to digital payments in the wake of the pandemic. This transition was spurred by shifts in consumer behavior and amplified by the need for contactless transactions. With its diverse offerings and established brand, American Express (NYSE: AXP) is well-positioned to capitalize on this evolving landscape.

Moreover, the company's focus on premium services and products resonates with the current market trends, where consumers seek more personalized and superior experiences. The fact that over 70% of the new accounts acquired in the quarter were fee-based products underlines this trend.

The performance also sheds light on demographic shifts in spending behavior. With over 60% of new consumer accounts stemming from millennial and Gen Z consumers, it's evident that younger generations are becoming a significant driving force behind American Express' (NYSE: AXP) growth. These demographics, recognized for their digital savviness and spending power, are expected to continue playing a pivotal role in the company's future growth trajectory.

Furthermore, the record revenues and card member spending indicate the recovery of consumer confidence and spending post-pandemic, especially in the travel and entertainment sectors.

In summary, American Express' (NYSE: AXP) Q2 2023 performance is not only reflective of the company's robust business model and strategies but is also a mirror of the broader trends and shifts in the market. The performance sets a solid foundation for the company as it navigates the evolving financial landscape and continues its journey of growth and innovation.
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