Will American Express' Earnings Move the Dow?

2013 is here, and we're getting into the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk decision.

Let's turn to American Express (NYSE:AXP). As a strong performer within the Dow Jones Industrials (DJINDICES:^DJI) in 2012, the credit card and travel services company made some smart strategic moves to expand the scope of its business. Let's take an early look at what's been happening with American Express over the past quarter and what we're likely to see in its quarterly report Thursday afternoon.

Stats on American Express

Source: Yahoo Finance.

Will American Express move the markets?
Analysts are reasonably optimistic about AmEx's prospects, with only minimal downward revisions to earnings estimates over the past quarter. The company has a good history of beating expectations, and with the shares having risen more than 5% since mid-October, it looks like investors want good news from the company as well.

Unfortunately, preliminary indications suggest that investors may not get everything they'd like. Just last week, AmEx preannounced some of its quarterly results, with revenue coming in at $8.1 billion and earnings finishing at $0.56 per share. The shortfall reflects restructuring charges of $400 million in connection with the planned layoffs of 5,400 workers, coming mostly from the travel side of the business. Still, when you exclude this and other one-time items, adjusted earnings came in at $1.09 per share.

More important for AmEx in the long run will be news of the company's ongoing battle with card giants Visa (NYSE:V) and MasterCard (NYSE:MA), whose performances in 2012 dramatically outpaced AmEx's more modest gains. Part of the problem comes from the fact that AmEx doesn't have the huge network of issuing banks that Visa and MasterCard have behind their cards, which results in more limited customer counts and transaction volume.

Still, with the company's BlueBird initiative, AmEx hopes that its partnership with Wal-Mart (NYSE:WMT) will boost prospects for both companies. For AmEx, Wal-Mart offers a host of lower-end customers, which is a demographic AmEx has largely ignored throughout its history. For Wal-Mart, the panache of American Express enhances its image as a retailer for customers of all income levels, rather than just discount-seekers.

AmEx has given a lot of information out already, but its release on Thursday afternoon should add more color to the company's future. You'll want to watch closely for guidance on where the company is headed in 2013, as its strategy will make a huge impact on its eventual results both this year and beyond.

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