American Express (NYSE: AXP) reported 4th quarter results on Friday, beating earnings estimates by $0.02, and delivery revenues in line with consensus estimates. The credit card company’s stock price rose 2.5% to a new record high in pre-market trade.
Total revenues grew 8.6% to $11.37 billion, broadly in line with previous quarters. Revenue growth was evenly spread across fees and lending-related income. Fourth-quarter EPS of $2.03 was 2 cents ahead of consensus, but down slightly from the last two quarters due to increased spending.
Spending by Amex customers rose 6% in the U.S. and 4% in other markets.
Consistent Full-year Performance
Net income for the full year fell from $6.9 billion in 2018 to $6.8 billion. Full-year EPS rose 1% to $7.99 as the share count declined. However, EPS were $8.20 when certain litigation and tax items were excluded. Revenue for the full year rose 8% to $43.6 billion, while expenses rose 9% to $31.6 billion.
During 2019, American Express added 11.5 million new cards, 70% of which were on fee-based programs.
The company expects revenues to grow between 8 and 10% during 2020. EPS are expected to be between $8.85 and $9.25, representing earnings growth of 10 to 15%.
How Does Amex Measure up Against Its Rivals?
Rivals, Visa (NYSE: V) and Mastercard (NYSE: MA) will both report next week. Amex has underperformed both competitors over the last 12 months, primarily due to a slump in the share price in the third quarter.
Mastercard is trading at a historically high valuation, while Visa and Amex are more conservatively valued. However, Amex’s net income growth has continued to trail that of both companies. Unless Amex’s peers report disappointing results next week, these results are unlikely to lead to a meaningful re-rating. The company does, however, remain a steady performer.