Stock to Watch For Earnings: American Express Company (NYSE:AXP)

American Express Company (NYSE:AXP) reported earnings for the three months ended Mar2016 on April 20, 2016. The company earned $1.45 per share on revenue of $8.09B. Analysts had been modeling earning per share of $1.35 with $8B in revenue.

First-quarter consolidated total revenues net of interest expense were $8.1 billion, up 2 percent from $8.0 billion a year ago. FX-adjusted consolidated total revenues increased 4 percent, reflecting a rise in net interest income, Card Member spending and net card fees.2

Consolidated provisions for losses were $434 million, up 3 percent from $420 million a year ago. The current quarter reflected the accounting for certain cobrand loan portfolios as “held for sale,” where credit costs are now reported in other operating expenses. The increase from last year was also impacted by a smaller reserve release than a year ago.

Consolidated expenses were $5.5 billion, up 5 percent, from $5.2 billion a year ago. The current quarter’s expenses included:

A $118 million increase in marketing and promotion costs to support initiatives to grow the business;

An $84 million ($55 million after-tax) restructuring charge;

A $63 million increase in rewards expenses, driven primarily by higher Card Member spending; and

A benefit of $127 million ($79 million after-tax) from a gain on the sale of the JetBlue cobrand portfolio, which was reported in other operating expenses.

The effective tax rate for the quarter was 35 percent, up from 34 percent a year ago.

The company’s return on average equity (ROE) was 23.6 percent, down from 29.0 percent a year ago.

American Express Company earnings per share showed a decreasing trend of -9.8% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 560%.Analysts project EPS growth over the next 5 years at 7.9%. It has EPS annual growth over the past 5 fiscal years of 8.5% when sales grew 2.8. It reported 1.8% sales growth, and -2.2% EPS decline in the last quarter.

The stock is trading at $65.76, up 31.45% from 52-week low of $50.27. The stock trades down -18.42% from its peak of $81.92 and 2.95% above the consensus price target of $67.7. Its volume clocked up at 5.25 million shares which is higher than the average volume of 5.1 million shares. Its market capitalization currently stands at $62.31B.