With the Ameriprise
A Supreme Court decision from 2004 allowed American Express to partner with banks for the issuance of its cards. Since then, the company has partnered up with big-leaguers like Citigroup
At first blush, there was a lot to like. Overall, revenue climbed about 9% for the quarter, and income from continuing operations rose by more than 12%. Cardmember spending rose 15% -- well above the lending results seen at the likes of Citigroup, Bank of America / MBNA, and Capital One
That's all well and good, but what concerns me a bit is how that meshes with the expense side of things. Expenses were well-controlled -- maybe too well-controlled -- as marketing and promotional spending rose just 11%. It seems that's part of how the company beat the average EPS estimate while falling short on the revenue side.
There's plenty to like about American Express' future. It has traditionally attracted a more affluent (and higher-spending) customer base, which has been part of the reason that merchants have tolerated higher fees. Now there's the added boost of bank-issued cards, which should help increase membership and revenue. Still, the market seems well aware of all this, and the stock doesn't look all that cheap to me.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).