American Express (NYSE:AXP) posts Q2 results on Friday, providing a gauge of whether consumers are still catching up on their travel after the pandemic restricted their wanderlust in 2020 and 2021.
The credit card company is expected to earn $2.81 per share in Q2 2023, compared with EPS of $2.40 in Q1 and $2.57 in Q2 2022. Revenue is seen rising to $15.4B from $14.3B in the previous quarter and from $13.4B in the year-ago period.
Watch for any change to the company’s guidance. In April, AXP reaffirmed its 2023 EPS outlook of $11.00-$11.40 ($11.04 consensus) and revenue growth guidance of 15%-17%.
Oppenheimer analyst Dominick Gabriele suspects that consensus estimates for American Express’s (AXP) 2023 and 2024 network volumes may be too high by 1.5% on average. The company’s monthly U.S. consumer and U.S. small- and medium business data suggest total network volume is poised to slow from 13.9% to ~10.6% Y/Y, he said in a note dated June 29.
The Visible Alpha consensus estimate for 2023 network volume stands at $1.72T and the 2024 consensus is $1.89T. For Q2 2023, network volume is expected to be $434.7B, up from $398.9B in Q1 2023.
On average, analysts expect net interest income of $3.06B, according to the Visible Alpha consensus, vs. $2.98 B in Q1 and $2.36B in Q2 2022.
Investors are keeping a close eye on credit quality as consumers continue to revert to prepandemic spending patterns. Provision for credit losses is expected to be $1.15B (Visible Alpha consensus) compared with $1.06B in the prior quarter and $410M a year ago.
American Express (AXP), though, is known for its high-credit-score customers. In June, its U.S. Consumer Card Member delinquency rate held steady at 1.1% and remained below the 1.4% rate in June 2019, before the pandemic. Its net-write-off rate crept up to 1.8% from 1.6% in May.
In the past 12 quarters, American Express’s (AXP) EPS has come in very close to consensus most of the time, slightly missing in the past two quarters. Its revenue performance is dicier, missing the consensus four times during the same period.
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American Express Q2 results on tap: Are consumers still revenge traveling?
