American Express (AXP, Financial) released its first quarter earnings after the market’s close on April 19. The company beat revenue and earnings estimates and the stock is up 5.36% in the two days following its earnings announcement.
Revenue and Earnings
Revenue for the first quarter was $7.9 billion, beating estimates by $170 million. Revenue was down -2% from the comparable quarter and -2% from the previous quarter. However, it is still above its five-quarter low of $7.774 billion in the third quarter of 2016.
Earnings per share beat estimates by $0.06 at $1.34. EPS increased 52% from the previous quarter and EPS was down 8% from the comparable quarter.
EPS gained from the previous quarter while revenue was slightly lower showing the firm’s focus on costs as its revenue continues to be challenged in a competitive credit card market which has led to lost partnerships with Costco and JetBlue.
According to American Express’ CFO the firm’s share buyback strategy and focus on reducing its cost structure by $1 billion are factors helping EPS. It has also seen revenue improvements in recent months from its promotional initiatives and its expansion into personal loans for existing customers in 2016.
Business Segments
Comparable quarter revenue growth by segment was steady in the first quarter. International consumer and network services reported the greatest revenue growth with a 5% increase. Global commercial services which accounted for 31% of total first quarter revenue also showed an increase with a gain of 3% over the comparable quarter’s revenue. US consumer services posted a revenue decrease of -8% and accounted for the greatest majority of the firm’s revenue at 38%.
Net income by segment showed some similar results. US consumer services accounted for 38% of net income at $469 million. In comparison to the first quarter of 2016 US consumer services revenue was down -32%.
Dividend and Total Return
American Express continues to be a steady dividend stock. It pays a quarterly dividend and currently has a forward dividend yield of 1.61%. Its most recent dividend of $0.32 was announced on March 27 and is payable on May 10.
The stock is currently selling for $79.59. Its total year-to-date return is 8.30%. It has a one-year return of 23.21%, a three-year return of -1.42% and a five-year return of 8.09%.
Shareholders
Institutional shareholders own 85% of the company’s outstanding stock. The firm’s CEO, Kenneth Chenault, owns 0.1% of the company’s shares. Top institutional shareholders include Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway with 16.77% and Vanguard with 5.40%.
Disclosure: I do not own any shares of American Express.
