By Michael Elkins
American Express Company (NYSE:AXP) is up 9.71% in early trading on Friday following the financial service company’s 4Q earnings report. AXP reported 4Q22 GAAP EPS came in at $2.07 vs. the consensus of $2.23. Relative to consensus, the EPS miss was characterized by lower PPNR and a higher provision. Total provision expenses of $1,027 million were $0.24/sh above the consensus of $802M. AXP's net revenues came in at $14,176M vs. consensus of $14,228M (a $0.06/sh miss).
However, despite the PPNR and provision miss, AXP’s 2023 guidance for 15-17% net revenue growth and EPS of $11.00-$11.40 implies approximately 4% upside to consensus net revenue and 6.4% upside to consensus EPS at the mid-point.
Wolfe Research reiterated a Peer Perform rating on the stock ahead of the company’s quarterly conference call. Analysts say that during the call they will focus on AXP’s forward view into travel bookings and what it suggests about the pace of U.S. consumer travel activity. They continued in a note, saying “We’ll also be looking for AXP to parse out how much of its better-than-expected outlook for revenue growth in 2023 it anticipates will come from spending vs. lending. Following this quarter’s greater-than-expected reserve build, investors will also want to hear whether AXP is seeing any signs of credit stress across different income, credit, and generational cohorts within its largely affluent customer base. Does AXP expect delinquency rates to flatten out once they return to pre-pandemic levels, or are they likely to continue to drift higher?”