[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / July 21, 2016 / Active Wall St. announces its post-earnings coverage on American Express Co. (NYSE: AXP). The company announced its Q2 FY16 financial results after market close on July 20, 2016. The biggest U.S. credit-card issuer by purchases reported that Q2 FY16 profit climbed 37%, helped by the sale of its Costco Wholesale Corp. (NASDAQ: COST) credit card portfolio and improved consumer spending. Register with us now for your free membership at: http://www.activewallst.com/register/.
Today, AWS is promoting its earnings coverage on AXP; touching on companies like Costco Wholesale Corp. (NASDAQ: COST,) Visa, Inc. (NYSE: V) and Citigroup Inc. (NYSE: C). Get more on these stocks at:
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Earnings Reviewed
For the period ended on June 30, 2016, the Manhattan based company posted earnings of $2.02 billion, or $2.10 per share, compared to earnings of $1.47 billion, or $1.42 per share. in the year ago period. Adjusted earnings came in at $2.26 per share, topping the $1.97 per share consensus estimate. The company generated $8.24 billion in revenue, compared to $8.28 billion in revenue in the year earlier period, missing analysts' forecast of $8.46 billion.
"We again made substantial investments in marketing and technology to help grow the business," CEO Ken Chenault said in their earnings statement.
Card Spending
For Q2 FY16, Customer card spending advanced 2.8% to $269.3 billion, higher from $262 billion in Q2 FY15. Investors kept a close watch on card spending since American Express generates most of its profit from charging a percentage from each transaction made on its network. The average discount rate, a measure of the fees American Express charges merchants, fell to 2.43% from 2.49% in Q2 FY15. The number of cards American Express has issued in the U.S. declined 14% in Q2 FY16 to 37 million, primarily due to the Costco credit cards being transferred to Citigroup Inc.
The Costco Divorce
The sale of the Costco credit card portfolio ended a 16-year partnership. In March 2015, Costco announced that it was ending its relationship with American Express, choosing Visa, Inc. and Citigroup Inc. as partners for its cash back credit card program. The loss was a major blow to American Express as Costco, its biggest co-branded partner, accounted for 10% of its total cards in circulation and 8% of the company's billed business. American Express sale of Costco Credit card returned $1 billion. In January 2016, Fidelity Investments also scrapped its credit card deal with the company, choosing Visa and U.S. Bancorp. While banks and rival networks have bid aggressively to wrest away these partnerships, Chenault has promised to avoid pursuing any deals where the terms are not economically sound.
To counter these losses, American Express has been aggressively spending and marketing to existing credit cardholders since the announcement of the switch. American Express has also undergone a heavy expense cutting program, which has resulted in roughly 4,000 job losses at the company. American Express also increased fees on some its cards to raise additional revenue.
Share Repurchase and Guidance
American Express expects full-year earnings per share to be at the high end of the previously announced guidance range of $5.40 to $5.70, while the forecast for 2017 remains unchanged at $5.60. The firm returned a record $2.8 billion of capital to investors so far this year.
Stock Performance
At the close yesterday, the company's shares were up 0.50% at $64.48 on volume of 7.97 million shares. However, in extended trading in New York, American Express' shares declined 1.01% to finish at $63.83. American Express' stock has gained 4.02% in the past one month.
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http://finance.yahoo.com/news/american-express-reports-second-quarter-200500342.html
http://www.reuters.com/article/us-american-express-results-idUSKCN1002QW
SOURCE: Active Wall Street