American Express: Modest Loan Growth and Strong Credit Wins the Race
American Express Co. (NYSE:AXP) closed the regular trading session up 1.34 percent at $76.26 per share on Wednesday and edged higher in post-market trading after reporting third-quarter financial results that came in ahead of expectations. Revenues at the credit services company (net of interest expense) climbed 6 percent on the year to $8.3 billion, beating the average analyst estimate of $8.19 billion. Earnings per share jumped 15 percent to $1.25, also beating the average analyst estimate of $1.22 per share.
The profit engine that drives credit services companies like American Express and Capital One Financial (NYSE:COF) (which will report third-quarter results on October 17) pretty much boils down to how much people are using credit, and how often they are delinquent or default. In the third quarter, both of these conditions improved, fueling the company’s strong top- and bottom-line growth despite what has been a generally uncertain financial environment.