American Express (AXP) reported strong Q2 earnings, exceeding expectations with an EPS of $3.49, $0.23 higher than the consensus of $3.26, and revenues rising 9.2% year-over-year to $16.33 billion, though slightly below the consensus estimate of $16.6 billion. The company's robust performance was driven by increased net interest income, higher Card Member spending, and continued strong card fee growth. Notably, the Q2 EPS included a $0.66 gain from the sale of Accertify.

For FY24, American Express provided optimistic guidance, forecasting an EPS range of $13.30 to $13.80 (Prior $12.65-13.15), surpassing the consensus of $12.97. The company also expects revenue growth between 9% and 11%, translating to approximately $65.96 to $67.17 billion, compared to the consensus estimate of $66.42 billion. This guidance reflects confidence in the core business performance, allowing the company to increase marketing investments by around 15% without impacting overall earnings.

CEO Stephen J. Squeri highlighted the company's momentum, with quarterly revenue reaching an all-time high and significant EPS growth. Key performance indicators included stable billing growth of 6%, strong new card acquisitions totaling 3.3 million, and double-digit growth in card fee revenues for the 24th consecutive quarter. Credit performance remained exceptional, with consolidated provisions for credit losses at $1.3 billion, up from $1.2 billion a year ago due to higher net write-offs, partially offset by a lower reserve build year-over-year.

American Express has seen substantial growth since the end of 2021, with revenues increasing by nearly 50% and Card Member spending up by almost 40%. The company has added approximately 23 million new cards and over 30 million merchant locations. This expansion, coupled with a premium, high-credit-quality customer base and well-controlled expenses, underscores the earnings power of the core business and supports confidence in sustained bottom-line growth.

Consolidated expenses for the quarter were $11.3 billion, a 1% increase from $11.1 billion a year ago. This rise was primarily due to higher variable customer engagement costs linked to increased Card Member spending and travel-related benefits, along with elevated marketing investments. These were offset by reduced operating expenses, largely due to the gain from the sale of Accertify.

Despite the strong earnings report and raised full-year guidance, American Express shares fell 1.5% after initially rising over 2% in premarket trading. The stock, trading just below its record high as of Thursday's market close, reflects broader market dynamics and investor reactions to the mixed revenue performance and future outlook. Nonetheless, the company's solid results and strategic investments indicate a positive trajectory for continued growth.

Shares of AXP are set to test the 10-day moving average ($242). A failure to hold this level will set up a key test at the 20- and 50-day convergence area ($236-237). This would be an intriguing entry point for investors with a longer-term outlook. However, potential investors should continue to track jobs data as a gauge on consumer health.