American Express, today's pick for IBD 50 Stocks to Watch, finds itself near new highs with about a week left before its earnings report — an event that could trigger a breakout.
The consensus of analysts polled by FactSet is second-quarter earnings of $3.23 a share, which would be a 12% increase from the year-ago period. Analysts see revenue at $16.589 billion, up 10% year over year.
Those results would represent some slowing from the company's performance over the past year. Revenue increases ranged from 13% to 21% the previous four quarters, while per-share earnings climbed 12% in second quarter of 2023, then jumped 34%, 27% and 39% the subsequent quarters, according to MarketSurge.
Breaking down estimates further, analysts expect net interest income of $5.846 billion vs. $4.775 billion a year ago, with a net interest margin of 8.84% vs 7.65%. Net card fees for the credit card company are estimated to rise to $2.051 billion from $1.789 billion year over year.
Analysts are bullish ahead of the second-quarter earnings report, due July 19 before the open. This week, Jefferies, Wells Fargo, Barclays, JPMorgan and other firms raised their price targets on American Express stock.
American Express Stock In Flat Base
The stock is forming a flat base with a 244.41 buy point. This is the first base since American Express bottomed at 140.91 in October. That's a 74% run in about seven months, so American Express stock certainly was deserving of a break.
While the base shows proper form, the relative strength line is lagging the stock's performance. And institutional buying has been soft, with an Accumulation/Distribution Rating of D+. Those aren't deal-killers, but suggest American Express stock will need investors to step up before it makes a run to new highs.
On Tuesday, IBD's Options column offered a pre-earnings trade for American Express stock that offers limited risk.
Warren Buffett's Berkshire Hathaway holds 151.6 million shares of American Express. Buffett, who tends to hold stocks for the long term, is known for being a value investor.
