Key Takeaways
- American Express posted record revenue, but it still came up short of forecasts.
- Total network volumes growth slowed after several quarters of double-digit percent growth.
- The firm set aside $1.2 billion to cover potential customer defaults.
American Express (AXP) was the worst-performing stock in the Dow as the credit card provider’s revenue missed analysts’ estimates and total network volumes growth slowed. The company also set aside more money for potential customer defaults.
Shares dropped 3.9% even as sales of $15.1 billion hit an all-time high. Profit of $2.89 a share was also a record, and more than forecasts.
Cardmember spending increased 8% to $426.6 billion, but that came after several consecutive quarters of double-digit percent expansion.
The company indicated it set aside $1.2 billion for credit losses, which was about three times higher than in the same period in 2022. American Express said that reflected higher net write-offs and building of reserves.
American Express also reiterated the full-year guidance it gave at the start of the year of earnings per share (EPS) of $11 to $11.40, and revenue growth of 15% to 17%.
Despite Friday’s losses, shares of American Express were still 15% higher for the year so far.
YCharts
Source: https://www.investopedia.com/amex-sales-miss-estimates-as-growth-slows-and-it-sets-aside-more-money-for-defaults-7564148?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo