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MarketScreener Homepage  >  Equities  >  Nyse  >  American Express Company    AXP

AMERICAN EXPRESS COMPANY

(AXP)
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Delayed Quote. Delayed Nyse - 10/21 04:03:41 pm
119.05 USD   +1.96%
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AMERICAN EXPRESS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) (form 10-Q)

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10/21/2019 | 01:59pm EDT
Business Introduction
When we use the terms "American Express," "we," "our" or "us," we mean American
Express Company and its subsidiaries on a consolidated basis, unless we state or
the context implies otherwise.
We are a globally integrated payments company that provides our customers with
access to products, insights and experiences that enrich lives and build
business success. Our principal products and services are credit and charge card
products, along with travel and lifestyle services, offered to consumers and
businesses around the world. Our range of products and services includes:
•Credit card, charge card and other payment and financing products
•Merchant acquisition and processing, servicing and settlement, and
point-of-sale marketing and information products and services for merchants
•Network services
•Other fee services, including fraud prevention services and the design and
operation of customer loyalty programs
•Expense management products and services
•Travel and lifestyle services
Our various products and services are sold globally to diverse customer groups,
including consumers, large corporations, mid-sized companies and small
businesses. These products and services are sold through various channels,
including mobile and online applications, direct mail, in-house sales teams,
third-party vendors and business partners, and direct response advertising.
Business travel-related services are offered through our non-consolidated joint
venture, American Express Global Business Travel (the GBT JV).
We compete in the global payments industry with charge, credit and debit card
networks, issuers and acquirers, paper-based transactions (e.g., cash and
checks), bank transfer models (e.g., wire transfers and Automated Clearing House
(ACH)), as well as evolving and growing alternative payment and financing
providers. As the payments industry continues to evolve, we face increasing
competition from non-traditional players that leverage new technologies,
business models and customer relationships to create payment or financing
solutions.
The following types of revenue are generated from our various products and
services:
•Discount revenue, our largest revenue source, primarily represents the amount
we earn on transactions occurring at merchants that have entered into a card
acceptance agreement with us, or a Global Network Services (GNS) partner or
other third-party merchant acquirer, for facilitating transactions between the
merchants and Card Members;
•Interest on loans, principally represents interest income earned on outstanding
balances;
•Net card fees, represent revenue earned from annual card membership fees, which
vary based on the type of card and the number of cards for each account;
•Other fees and commissions, primarily represent Card Member delinquency fees,
foreign currency conversion fees charged to Card Members, loyalty
coalition-related fees, travel commissions and fees, service fees earned from
merchants, and Membership Rewards program fees; and
•Other revenue, primarily represents revenues arising from contracts with
partners of our GNS business (including commissions and signing fees less issuer
rate payments), cross-border Card Member spending, ancillary merchant-related
fees, insurance premiums earned from Card Members, earnings from equity method
investments (including the GBT JV), and prepaid card and Travelers
Cheque-related revenue.
Forward-Looking Statements and Non-GAAP Measures
Certain of the statements in this Form 10-Q are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Refer to the "Cautionary Note Regarding Forward-Looking Statements" section. We
prepare our Consolidated Financial Statements in accordance with accounting
principles generally accepted in the United States of America (GAAP). However,
certain information included within this Form 10-Q constitutes non-GAAP
financial measures. Our calculations of non-GAAP financial measures may differ
from the calculations of similarly titled measures by other companies.

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Table of Contents


Bank Holding Company
American Express is a bank holding company under the Bank Holding Company Act of
1956 and The Board of Governors of the Federal Reserve System (the Federal
Reserve) is our primary federal regulator. As such, we are subject to the
Federal Reserve's regulations, policies and minimum capital standards.
Business Environment
Our results for the third quarter reflect solid performance, demonstrating broad
based growth across our businesses and geographies. We continued to invest in
new services and Card Member benefits, new card acquisitions and expanding our
merchant network, while returning $1.8 billion of capital to shareholders
through share repurchases and dividends.
Our worldwide billed business increased 5 percent over the prior year and
worldwide proprietary billings, which comprises 86% of our total billings, grew
6 percent, led by consumers. The US dollar remained strong, relative to the
prior year, against most major currencies in which we operate, resulting in a
negative impact on our billings and revenue growth. After adjusting for foreign
currency exchange (FX) rates, worldwide proprietary billed business increased 7
percent over the prior year, with international proprietary billings growing 13
percent.1 This spending is occurring against the backdrop of an economy that is
growing at a more modest pace relative to 2018. GNS billed business declined 6
percent (2 percent on an FX-adjusted basis) as we continue to exit the network
business in Europe and Australia due to certain regulatory changes; excluding
the billings from those geographies, GNS billed business grew 3 percent
year-over-year on an FX-adjusted basis.1
Revenues net of interest expense increased 8 percent (9 percent on an
FX-adjusted basis), driven by a well-balanced mix of growth across Card Member
spending, net interest income and card fees.1 This was the ninth consecutive
quarter with FX-adjusted revenue growth of 8 percent or better, compared to the
corresponding prior year period.1 The increase in card fees reflects our
approach of enhancing the value of our premium products by adding new benefits
that are driving higher engagement with new and existing customers. Our net
interest yield increased 30 basis points year-over-year, reflecting continued
positive impacts from mix and pricing initiatives.
Card Member loans grew 8 percent year-over-year, as we continued to expand our
lending relationships with existing customers and acquired new Card Members.
Provisions for losses increased 8 percent, reflecting a slight increase in net
write-offs and delinquencies.
Spending on customer engagement (the aggregate of rewards, Card Member services,
and marketing and business development expenses) increased 11 percent
year-over-year with growth across all categories. Increases in rewards and Card
Member services reflected the growth in proprietary billings and continued
investment and usage across many of our premium travel-related benefits. We
continue to expect Card Member services to be our fastest growing expense
category, as it includes the costs of many components of our differentiated
value propositions that support strong Card Member acquisition and engagement.
Marketing and business development expense grew due to continued investments in
our cobrand partnerships, including the impact of the renewal of our
relationship with Delta Air Lines earlier in 2019, and higher corporate client
incentives.
We continue to see attractive growth opportunities across our businesses and
plan to invest to take advantage of them in order to drive revenue growth over
the moderate to long term. While we continue to see some headwinds in the
environment, including from economic uncertainty, regulation in countries around
the world and intense competition, we remain focused on delivering
differentiated value to our merchants, Card Members and business partners and
delivering appropriate returns to our shareholders.
See "Certain Legislative, Regulatory and Other Developments" for information on
certain matters that could have a material adverse effect on our results of
operations and financial condition.

1 The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the current period apply to the corresponding prior year period against which such results are being compared). FX-adjusted revenues and expenses constitute non-GAAP measures. We believe the presentation of information on a foreign currency adjusted basis is helpful to investors by making it easier to compare our performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.


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Table of Contents

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2019 43 573 M
EBIT 2019 12 313 M
Net income 2019 6 646 M
Debt 2019 -
Yield 2019 1,37%
P/E ratio 2019 14,9x
P/E ratio 2020 13,3x
Capi. / Sales2019 2,24x
Capi. / Sales2020 2,08x
Capitalization 97 415 M
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Technical analysis trends AMERICAN EXPRESS COMPANY
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Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 31
Average target price 131,73  $
Last Close Price 119,05  $
Spread / Highest target 24,3%
Spread / Average Target 10,7%
Spread / Lowest Target -9,28%
EPS Revisions
Managers
NameTitle
Stephen J. Squeri Chairman & Chief Executive Officer
Jeffrey C. Campbell Chief Financial Officer & Executive Vice President
Marc D. Gordon Chief Information Officer & Executive VP
Charlene Barshefsky Independent Director
Peter F. Chernin Independent Director
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