American Express (AXP) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Updated
Best Buy (BBY) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

In the latest trading session, American Express (AXP) closed at $109.60, marking a +1.7% move from the previous day. This move outpaced the S&P 500's daily gain of 1.06%. At the same time, the Dow added 0.83%, and the tech-heavy Nasdaq gained 1.72%.

Coming into today, shares of the credit card issuer and global payments company had gained 3.29% in the past month. In that same time, the Finance sector gained 0.25%, while the S&P 500 lost 2.09%.

AXP will be looking to display strength as it nears its next earnings release, which is expected to be January 17, 2019. In that report, analysts expect AXP to post earnings of $1.79 per share. This would mark year-over-year growth of 13.29%. Meanwhile, our latest consensus estimate is calling for revenue of $10.59 billion, up 19.84% from the prior-year quarter.

AXP's full-year Zacks Consensus Estimates are calling for earnings of $7.38 per share and revenue of $40.45 billion. These results would represent year-over-year changes of +25.72% and +20.85%, respectively.

Investors might also notice recent changes to analyst estimates for AXP. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 1.4% higher. AXP is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note AXP's current valuation metrics, including its Forward P/E ratio of 14.6. This represents a premium compared to its industry's average Forward P/E of 10.63.

Also, we should mention that AXP has a PEG ratio of 1.46. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Financial - Miscellaneous Services was holding an average PEG ratio of 1.35 at yesterday's closing price.

The Financial - Miscellaneous Services industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 172, which puts it in the bottom 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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