American Express (AXP) reported fourth-quarter 2024 earnings largely in line with analyst forecasts, leading to a slight dip in its stock price on Friday. Despite record card member spending and new card acquisitions, the financial giant’s share price fell after the announcement. This article delves into the key highlights of American Express’s Q4 performance.
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Q4 Performance Analysis: A Deep Dive
American Express reported a net income of $2.17 billion, translating to $3.04 per share, on revenue of $17.18 billion. These figures closely matched analyst expectations of $2.17 billion in profit, or $3.05 per share, and $17.17 billion in revenue, as reported by Visible Alpha. Net interest income, however, fell slightly short of projections, reaching $4.04 billion compared to the anticipated $4.09 billion.
American Express logo displayed at a golf tournament
Record Spending and New Card Acquisitions Fuel Growth
Despite the minor shortfall in net interest income, CEO Stephen Squeri highlighted significant achievements during the quarter. These include record annual card member spending, record net card fee revenues, and an impressive 13 million new card acquisitions. Squeri attributed the robust performance to “stronger spending from our consumer and commercial customers during the holiday season.” Furthermore, American Express continues to expand its global merchant network, adding millions of new locations.
Future Outlook and Dividend Increase
Looking ahead to 2025, American Express projects revenue growth between 8% and 10%, with earnings per share (EPS) ranging from $15.00 to $15.50. These projections align closely with analyst estimates of 8.2% revenue growth and EPS of $15.26. Reinforcing its confidence in future performance, the company announced a dividend increase to 82 cents per share, up from 70 cents.
Market Reaction and Contextual Analysis
Despite the positive earnings report and strong future outlook, American Express shares experienced a 2.5% decline to $317.64 shortly after the market opened on Friday. This minor setback followed a record closing high of $325.87 on Thursday and a remarkable 75% surge in share price over the past 12 months. The company’s performance should be viewed within the broader context of a strong earnings season for major banks, driven by a resurgence in Wall Street dealmaking activity. American Express’s results contribute to this positive trend, demonstrating the resilience and growth potential of the financial sector.
Conclusion: Continued Growth Expected Despite Minor Stock Dip
American Express’s fourth-quarter results underscore the company’s continued strength and growth trajectory. While the stock experienced a slight dip following the earnings announcement, the underlying fundamentals remain solid. Record spending, new card acquisitions, and a positive outlook for 2025 suggest that American Express is well-positioned for continued success in the dynamic financial services landscape. The dividend increase further solidifies the company’s commitment to shareholder value. Investors should consider these factors when evaluating the long-term prospects of American Express.
