Why American Express Earnings Have the Dow Stock Lower

An American Express sign at the Bund Conference in Shanghai, China, in September 2024 — (Image credit: CFOTO/Future Publishing via Getty Images)

American Express (AXP) is the worst Dow Jones stock Friday after the global payments company reported mixed results for its third quarter and raised its full-year profit forecast.

In the three months ended September 30, American Express said revenue increased 8.2% year over year to $16.6 billion as card member spending rose 5.8% to $387.3 billion. Its earnings per share (EPS) were up 5.8% from the year-ago period to $3.49.

The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $16.7 billion and earnings of $3.28 per share, according to Yahoo Finance.

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"We had another strong quarter that reflects the earnings power of our business model and our continued investments for growth," said American Express CEO Stephen J. Squeri in a statement. "We continued to attract large numbers of new premium Card Members with 3.3 million new card acquisitions, while maintaining our high retention rates, excellent credit performance, and expense discipline."

As a result of its strong financial performance in the first nine months of 2024, AXP raised its full-year profit forecast. The company now anticipates EPS in the range of $13.75 to $14.05, up from its previous forecast of $13.30 to $13.80. It still expects revenue growth of around 9%.

"Our continued momentum demonstrates the sustainability of our product refresh strategy and the growth it is driving in our portfolio," Squeri said.

Is American Express stock a buy, sell or hold?

Heading into today's trading, American Express was one of the best Dow stocks so far this year, second only to Walmart (WMT) in terms of price return. Still, Wall Street remains on the sidelines when it comes to the blue chip stock.

According to S&P Global Market Intelligence, the average analyst target price for AXP stock is $265, which is a discount to where shares are currently trading. Meanwhile, the consensus recommendation is Hold.

Financial services firm BofA Securities is one of those with a Neutral (Hold) rating on the large-cap stock, along with a $263 price target.

"We rate AXP at Neutral as we think risk/reward is balanced," wrote BofA Securities analyst Mihir Bhatia in an August 21 note. "AXP's strong execution and card acquisitions are a positive but this is balanced by a tough spend backdrop and a premium valuation."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.