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Analysis of American Express Company

Analysis of American Express Company

27 July 2022

American Express: The Power of Legend

During another period of corporate reporting of US companies, American Express published its indicators. The lion’s share of global payments passes through its transaction systems, but this is only the tip of the iceberg of services that this business represents. AEC users buy millions of goods and services around the world, customers are both large corporations and small and medium-sized companies, and the business itself sells a lot of services through mobile applications, partners, direct advertising and third-party intermediaries. 

Strengths of American Express reporting for the second quarter of 2022:

  • net revenue growth by 30.8% YoY to $13.4 billion, above expectations of $12.5 billion;
  • growth of net interest income by 19.8% to $2.4 billion;
  • growth of non-interest income by 31% to $11 billion;
  • growth of the total volume of transactions within the payment system by 24.9% to $394.8 billion;
  • equity ratio of 10.3%, within the target range of 10-11;
  • the company is expanding its marketing expenses, retaining existing customers and attracting new ones, as well as developing and presenting new products to the market. 

Risks: 

  • net profit drop by 13.9% YoY to $2.42 per security;
  • macroeconomic and geopolitical risks.

The consensus estimate suggests that American Express securities may reach $173-175 in the next 12 months.

The technical picture of trading in AEC securities looks promising. The MACD indicator develops growth in the negative area and goes into the positive, confirming the buy signal. The Stochastic oscillator has started a reversal movement in the positive area and can go up, keeping the buy signal in force.

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