American Express Soars with Record $61 Billion Revenues and Optimistic 2024 Outlook, Despite Slight EPS Miss

American Express (AXP) released its earnings report for the fourth quarter of 2023, showcasing strong financial performance and optimistic prospects. The company's CEO highlighted record revenues, with annual sales increasing by over 40% since January 2022, reaching $61 billion. This growth can be attributed to the increased spending of Card Members, which rose by 37% on an FX-adjusted basis to reach an all-time high of $1.5 trillion.

The CFO of American Express noted that restaurant spending in 2023 surpassed $100 billion for the first time, indicating positive trends in consumer behavior. Importantly, the company emphasized that repayment of student loans in the United States did not impact spending patterns.

American Express provided long-term guidance for revenue growth of over 10% and mid-teens EPS growth. The company forecasts 2024 EPS in the range of $12.65 to $13.15, surpassing the estimated $12.40. American Express projects revenue growth of 9% to 11% for the same period.

In the fourth quarter of 2023, the company reported net income of $1.9 billion or $2.62 per share, compared to $1.6 billion or $2.07 per share in the previous year. It did fall short of the consensus estimate of $2.65 due to the higher credit costs. Consolidated total revenues net of interest expense were $15.8 billion, up 11% from $14.2 billion a year ago, mainly driven by higher net interest income and increased Card Member spending.

Provisions for credit losses reached $1.44 billion, marking a 40% increase year-over-year. However, this figure was slightly above the estimated $1.39 billion. Earnings per share (EPS) were $2.62, surpassing the $2.07 recorded in the same period last year but it did fall short of the estimated $2.65.

For the full year of 2023, American Express achieved a 14% increase in earnings per share, with EPS reaching $11.21. The company also reported record full-year revenue of $60.5 billion, a 15% increase on an FX-adjusted basis.

Consolidated total revenues net of interest expense for the year rose by 14% to $60.5 billion, primarily driven by higher net interest income and increased spending by Card Members. Credit metrics remained strong, with net write-off and delinquency rates for total Card Member loans and receivables staying below pre-pandemic levels.

Consolidated expenses increased by 10% to $45.1 billion, primarily due to higher customer engagement costs. These costs were driven by increased Card Member spending and utilization of travel-related benefits. However, marketing expenses decreased, helping to partially offset the overall increase. The consolidated effective tax rate for the year was 20.3%, down from 21.6% the previous year, largely due to changes in the geographic mix of income.

Based on this strong performance, American Express has announced its intention to increase the regular quarterly dividend on its common shares by 17%, from $0.60 to $0.70 per share, starting with the first quarter of 2024.

In summary, American Express has delivered impressive financial results, with significant revenue growth and strong Card Member spending. The company's guidance for 2024 indicates continued positive momentum, with anticipated revenue growth of 9% to 11% and EPS between $12.65 and $13.15. American Express remains focused on its aspiration of achieving revenue growth of 10% or more and mid-teens EPS growth.

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