What To Expect From American Express Stock?
Nasdaq American Express stock(NYSE: AXP) has gained 7% YTD as compared to the 16% rise in the S&P500 over the same period. Further, it is currently trading at $158 per share, which is 13% below its fair value of $182 Trefis estimate forAmerican Express valuation.
Interestingly, American Express stock had a Sharpe Ratio of0.5since early 2017, which is lower than0.6for the S&P 500 Index over the same period. This compares with theSharpe of 1.29for the TrefisReinforced Value portfolio. Sharpe is a measure of return per unit of risk,and high-performance portfolios can provide the best of both worlds.
The credit card giant posted mixed results in the second quarter of 2023, with earnings beating the consensus but revenues missing the mark. It reported total revenues of $15.05 billion up 12% y-o-y, driven by an 8% growth in the noninterest revenues and a 32% jump in the net interest income (NII). The NII was up due to higher interest rates and an increase in revolving loan balances. Similarly, the noninterest income benefited from improvement in billed business, processed volumes, and premium card portfolios. On the cost front, provisions for credit losses witnessed an unfavorable increase from $410 million to $1.2 billion. This resulted in a net income of $2.17 billion up 11% y-o-y.
