American Express (NYSE:AXP) stock jumped on Friday after the credit card company released its latest earnings, which proved to be impressive. For the fourth quarter, Amex reported EPS of $2.62 which beat analyst expectations of $2.64. It was also a big improvement from a year ago, when EPS was just $2.07.
The company's Q4 revenue of $15.8 billion, while marginally below the estimated $16 billion, still reflects a significant increase from $14.2 billion a year ago. This growth was primarily driven by higher net interest income and increased Card member spending. Despite a rise in provisions for credit losses to $1.4 billion from just over $1 billion in the year-ago quarter, reflecting higher net write-offs, American Express's overall credit metrics remain strong.
One of the most compelling aspects of American Express's recent performance is its revenue growth and the nature of its client base. The company has witnessed a more than 40% increase in revenues since January 2022, from $42 billion to $61 billion. Card member spending has risen to an all-time high of $1.5 trillion. These figures underscore the strength and resilience of its premium customer base, which tends to skew wealthier.
Looking ahead, American Express's guidance for 2024 is particularly encouraging. The company expects revenue growth of 9% to 11% and anticipates an EPS in the range of $12.65 to $13.15, surpassing analysts' estimates of $12.38. This guidance reflects the company's strategic focus on maintaining revenue growth of 10% or more and mid-teens EPS growth.
American Express's recent financial performance, combined with its optimistic outlook for 2024, makes this a promising growth stock to own this year. Over the past decade, the stock has generated returns of 135%.
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