Earnings Preview: Will American Express’ Q4 report impress the market?

American Express Company (NYSE: AXP) is expected to report higher revenue and profit for the fourth quarter of fiscal 2024. Last year, the credit card giant delivered stable financial performance, aided by higher net interest income amid solid loan volumes, healthy card member spending, and accelerated card fee revenue growth.

After a modest start to 2025, the company’s stock gathered momentum and set a new record this week. The shares have been in an upward spiral for over a year, gaining an impressive 73% and outperforming the market by a wide margin during that period. After those big gains, the current valuation is relatively high, but long-term investors would want to keep the stock on their watchlists due to the company’s strong fundamentals and promising prospects.

Estimates

American Express is gearing up to publish its fourth-quarter earnings report on January 24, at 7:00 am ET. Analysts are optimistic about the results and predict a 16% annual growth in adjusted profit to $3.03 per share. The positive outlook reflects an estimated 9% increase in revenues to $17.18 billion in the December quarter.

A few weeks ago, the Amex leadership raised its full-year earnings guidance to the range of $13.75 per share to $14.05 per share from the previous estimate of $13.30-13.80 per share. It sees a 9% increase in FY24 revenue. The company said it has achieved its target of refreshing 40 products globally, and expects to refresh more products by year-end.

Earnings Rise

In the third quarter, adjusted earnings grew 6% Y-o-Y to $3.49 per share. Reported net income was $2.51 billion or $3.49 per share in Q3, compared to $2.45 billion or $3.30 per share last year. Revenues, net of interest expense, rose 8% to $16.6 billion in the September quarter. The bottom line exceeded Wall Street’s expectations while revenues missed, continuing the trend seen in recent quarters.

From American Express’ Q3 2024 earnings call:

“…Our focus on premium products continues to be the foundation of our very strong credit performance. We continue to manage our expense base with discipline. Year to date, excluding the gain from our Accertify, operating expenses have grown very modestly as we fully leverage the scale and the digitization of our operations. This business model is yielding very strong earnings, which is enabling us to increase investments to grow the franchise and also to return excess capital to our shareholders.”

Spending Trend

Small businesses, which play a significant role in Amex’s business, have been spending less lately on a same-store basis, compared to the post-COVID days, amid concerns about the health of the economy. While consumer spending remains under pressure generally, the company’s high-income card members continue spending on discretionary activities like travel and dining. The healthy card-member base bodes well for the company as the lion’s share of its revenue comes from card-member fees.

On Friday, AXP made modest gains in the early hours of the session, trading well above its 52-week average price. In the past six months, the value has increased by more than a quarter.