Shares of the credit card and payments company American Express (AXP 1.17%) had fallen over 2% as of 1:41 p.m. ET today after management tempered investors' expectations about near-term top-line growth at an investor conference this morning.
Expectations too high right now
American Express CFO Christophe Le Caillec told investors at a conference that expectations for revenue in the first quarter of 2025 are "too high" right now. Wall Street analysts currently expect revenue net of interest expense to come in at close to $17.1 billion, according to data provided by Visible Alpha. Le Caillec attributed lower revenue growth due to there being one less day in the first quarter and a stronger dollar now than in December. Revenue net of interest expense grew 9% in the fourth quarter.
Le Caillec did say that management is " ... very confident and very comfortable with the full-year guidance." A few weeks ago, management said it expects the company to generate between 8% to 10% revenue growth and earnings per share of $15 to $15.50 in 2025. Management also said it expects to increase the company's quarterly dividend by 17%.
NYSE: AXP
Key Data Points
Expensive but good improving backdrop
At over 20 times forward earnings, American Express doesn't trade at its most expensive historical valuation but is trading at elevated levels. The good news is the backdrop for financials has improved dramatically in recent months from a steepening yield curve to a consumer that is now looked upon with more strength by the market.
American Express is also a proven company with a strong management team and business that includes a customer base that should be more resilient during recessions. I'm indifferent on the stock right now. I think the business will keep performing well and likely serve shareholders well long term, but there could be pullbacks in the near future that investors may want to wait for as well.
