American Express Co (NYSE: AXP) posted first-quarter earnings that declined from last year. While the Q1 earnings beat estimates, revenue missed analysts’ views. Following the release of first-quarter results, the stock closed at $83.17, up $0.71 or 0.86% from the prior close.
The New York-based company posted Q1 revenue of $10.31 billion, down 0.5% from $10.36 billion in a similar period last year. The Wall Street analysts anticipated revenues of $10.67 billion in the first quarter.
For the quarter ended March 2020, the financial institution posted net income of $367 million, or $0.41 per share, down from $1.55 billion, or $1.80 a share, in the prior-year quarter.
Excluding other charges, adjusted diluted earnings for 1Q 2020 was $1.98 per share, compared with $2.01 per share last year. Analysts polled by Thomson Reuters anticipated earnings of $1.69 per share. In the past four quarters, the company has exceeded consensus EPS forecasts four times.
Stephen Squeri, Chairman and CEO, explained the impact of coronavirus disease on the economy. “The first two months of 2020 continued the strong momentum we have delivered over the past two years, but we’re now in a different world. The deterioration in the economy due to COVID-19 impacts that began in the first quarter and accelerated in April has dramatically impacted our volumes. While we can’t predict just how the economy and our business will perform in the coming months, we can focus on supporting our colleagues and customers while remaining financially strong and positioning for growth when the economy begins to improve.”
Segment-wise,
- Global Consumer Services Group posted a Q1 net income of $201 million, down from $954 million in the previous year.
- Global Commercial Services reported a decline in the net income to $38 million, from $512 million a year ago.
- Global Merchant and Network Services recorded Q1 net income of $417 million, compared with $571 million in the prior-year period.
- Corporate and Other losses for first-quarter narrowed to $289 million, from a net loss of $487 million last year.
Consolidated provisions for losses in 1Q 2020 were increased to $2.60 billion, from $809 million in the year-ago period. The increase was led mainly by a $1.70 billion increase in reserves, mirroring a gloomy macroeconomic environment due to the Covid-19 outbreak. The consolidated effective tax rate declined to 18.8%, from 20.8% last year.
The mixed results are anticipated to keep the stock range-bound in the short-term.
The historical price chart indicates that the stock has broken the support level of 100. The MACD indicator also has a negative reading. Furthermore, the stock is trading below its 50-day moving average. Therefore, we are anticipating the stock to remain bearish in the short-term.
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