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Is a Beat Likely for American Express (AXP) in Q1 Earnings?

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American Express Co. AXP is scheduled to report first-quarter 2021 results on Apr 23, before the opening bell.

The Zacks Consensus Estimate for the company’s first-quarter earnings and revenues is pegged at $1.68 per share and $9.24 billion, respectively, indicating a decline of 15.15% and 10.39% each from the corresponding prior-year quarter’s reported figures.

Factors to Impact Q1 Results

Discount revenues, which constitute the company’s largest revenue line, are likely to have declined due to a decrease in the average discount rate. The average discount rate decrease is expected to have been driven by a shift in spend mix to non-Travel & Entertainment (T&E) categories, partly offset by a modest improvement in T&E spend. The Zacks Consensus Estimate for discount revenues stands at $5.37 billion, suggesting an 8% decline from the year-ago period’s reported figure. The same for the average discount rate is pegged at 2.26%, hinting at a decrease from 2.34% reported in the year-ago quarter.

Net interest income, the second largest revenue driver, is likely to have remained lower or unchanged sequentially as loan and receivable balances are expected to have been modest sequentially due to seasonal spending patterns.

Also net card fees, the third largest revenue driver, is expected to have declined due to the company’s decision to pull back on new card acquisitions. Management stated that the company started to ramp up new card acquisition in the third and the fourth quarter and will continue to increase investments in this area in 2021. Thus, it will take time for card fee growth to reaccelerate. As a result, management expects card fee growth to dip into the single digits midway through this year before it starts to eventually reaccelerate.

In the to-be-reported quarter, operating expenses might have declined as the company continues to keep a tight control over its operating costs.

Earnings Surprise History

The company boasts an attractive earnings surprise record. Its bottom line beat estimates in three of the last four quarters (and missed in one), the average surprise being 43.36%. This is depicted in the chart below:

American Express Company Price and EPS Surprise

American Express Company Price and EPS Surprise
American Express Company Price and EPS Surprise

American Express Company price-eps-surprise | American Express Company Quote

Here is what our quantitative model predicts:

Our proven model predicts an earnings beat for American Express this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: American Express has an Earnings ESP of +5.99%.

Zacks Rank: American Express currently has a Zacks Rank #3.

Other Stocks to Consider

Some other stocks worth considering with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Intercorp Financial Services Inc. IFS has an Earnings ESP of +6.77% and is presently Zacks #2 Ranked.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oportun Financial Corporation OPRT has an Earnings ESP of +60.00% and is presently Zacks #2 Ranked.

Virtu Financial, Inc. VIRT has an Earnings ESP of +3.26% and is a #2 Ranked player, presently.

Zacks Top 10 Stocks for 2021

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American Express Company (AXP) : Free Stock Analysis Report

Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report

Oportun Financial Corporation (OPRT) : Free Stock Analysis Report

Intercorp Financial Services Inc. (IFS) : Free Stock Analysis Report

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Zacks Investment Research