American Express Surprises To The Upside

Shares of charge card company American Express rose 2.9% Friday, despite broad based weakness in U.S. markets. The gains came after the company reported better than expected revenue and earnings for the fourth quarter, and for 2019 in total. The company also released optimistic guidance for 2020.

American Express reported earnings of $2.03 a share on revenue of $11.365 billion. Analysts had expected the company to report earnings of $2.01 a share on revenue of $11.26 billion.

Management said the strong earnings were attributable to a “well balanced mix” of lending, spending, and fee revenues. They also noted that in 2019 American Express added 11.5 million new card holders, and 70% of them opted for fee-based products. That helped lift fee-based revenues 17% year-over-year.

On an annual basis profits were $8.30 a share, or 12% greater than in the previous year. American Express said they expect 2020 profits to come in at $8.85 to $9.25 a share and revenue to grow by 8-10%. Analysts have a wider range of expectations for earnings in 2020, from $8.47 to $9.67 a share.

American Express shares are up 8.5% already in 2020, and are up 35.5% over the past 52 weeks, beating the performance of the S&P 500. The stock is also roughly 1% from its record high.

With consumer spending remaining strong in the U.S. American Express should continue to benefit. It can also look forward to expanding into the world’s second largest economy after the People’s Bank of China recently accepted an application for American Express to do business in China.