American Express (AXP 0.45%) easily surpassed expectations in the first quarter and is guiding for full-year earnings above what Wall Street expected. Investors are buying in, sending shares of Amex up 4% as of 11 a.m. Eastern.
Broad strength across all generations
Investors are watching bank stock earnings closely this quarter, looking for signs that higher rates are causing credit quality, and earnings, to deteriorate. American Express' results should help quell some of those fears.
The company earned $3.33 per share in the first quarter on revenue of $15.8 billion, topping the consensus expectation of $2.78 per share on sales of $14.86 billion. Earnings increased 39% year over year, and revenue was up 11%, fueled by higher member spending and strong fee-based income.
"We continue to attract high-spending, high credit-quality customers to the franchise, with new card acquisitions accelerating sequentially to 3.4 million in the quarter," CEO Stephen J. Squeri said in a statement. "Our fee-based products accounted for around 70% of the new account acquisitions we saw in the quarter, and we continue to see strong demand from Millennial and Gen Z consumers, who accounted for over 60% of new consumer account acquisitions globally."
Consolidated provisions for credit losses were $1.3 billion, compared with $1.1 billion a year ago.
Is Amex stock a buy after its strong quarter?
American Express is forecasting full-year revenue growth of 9% to 11% and full-year earnings of $12.65 to $13.15 per share. That range suggests significant upside to Wall Street's $12.08-per-share estimate.
With Friday's rally, American Express shares are now up 20% for the year and 36% over the past 12 months. The stock is performing well and has momentum, and if the company can hit its guidance for the year, there is more upside potential from here.
