American Express (AmEx) has showcased surprising resilience in its fourth-quarter performance, driven by a surge in consumer card usage, particularly during the bustling holiday season. As reported by CFO Christophe Le Caillec, the strong uptick in spending was largely attributed to increased travel and entertainment activities. Specifically, airline travel emerged as a noteworthy sector, contributing significantly to the overall growth. Measuring the performance by billed business, AmEx noted an impressive 8% increase, culminating in $408.4 billion for the quarter. This uptick impacted the company’s overall revenue, which climbed to $17.18 billion—surpassing analysts’ expectations of $17.16 billion according to LSEG estimates.
Analytical insights from William Blair highlighted the 8% growth in billings as a positive sign for AmEx, particularly since it sets a foundational benchmark for the company to achieve its ambitious target of a minimum 10% revenue growth in the coming years. CEO Stephen Squeri noted that not only were the fourth-quarter figures stronger than anticipated, but they also indicated a continuation of that trend into the initial weeks of January. Furthermore, Squeri mentioned an uptick in small-business sentiment, signaling enhanced spending patterns that contributed to these favorable results.
On the earnings front, AmEx reported a per-share profit of $3.04, aligning squarely with expectations. However, while the current performance paints a picture of strength, it also sets a high benchmark for future growth prospects.
Looking ahead, AmEx has outlined its earnings per share forecast for 2025 to fall between $15.00 and $15.50, contrasted with the market’s expectation of $15.23. The firm has also projected revenue growth rates between 8% and 10%, just shy of the average analyst expectation of 8.1%. Edward Jones analyst Kyle Sanders articulated a cautious yet constructive viewpoint regarding AmEx’s future outlook. While acknowledging that continued performance akin to the fourth quarter could push revenue growth above the anticipated 10%, he also warned that unforeseen circumstances such as economic hurdles or geopolitical tensions could hinder these ambitious targets.
Investors reacted somewhat negatively to AmEx’s projections, causing shares to drop 2.7% in early trading. This reaction can be attributed to heightened expectations after a robust stock performance in the lead-up to the announcement. As Zacks Investment Management’s Brian Mulberry observed, the decline was more reflective of investors’ anticipations than the quarter’s strong results.
American Express found itself in a paradox: showcasing strong fourth-quarter results while navigating the lofty expectations of investors. The company’s impressive growth metrics in consumer spending—particularly in travel and entertainment—illustrate its resilience and strategic focus. However, as they set the stage for future growth, maintaining momentum will be crucial in an environment where market sentiment and economic factors can shift unexpectedly. Nonetheless, with a forward-looking strategy and adaptation to market conditions, AmEx stands poised to capitalize on potential growth opportunities ahead.