Will AmEx (AXP) Miss Earnings Estimates? - Analyst Blog
April 15 2014 - 4:40PM
Zacks
American Express Co. (AXP) (AmEx) is scheduled
to release its first-quarter 2014 financial results after the
closing bell on Apr 16. Let’s have a look at the company’s earnings
prediction right before the announcement.
What Sort of Surprise?
Our proven model shows that AmEx is unlikely to beat earnings as
it lacks the required combination of two key ingredients.
Zacks ESP: AmEx has a negative Zacks ESP. That
is because Expected Surprise Prediction or Earnings ESP, which
represents the difference between the Most Accurate estimate of
$1.29 per share and the Zacks Consensus Estimate of $1.30, is
-0.8%.
Zacks Rank: AmEx has a Zacks Rank #3 (Hold).
Note that stocks with Zacks Rank #1, 2 and 3 have significantly
higher chances of beating earnings. Sell-rated stocks (#4 and 5)
are kept under the radar and are never considered going into the
earnings announcement.
The combination of AmEx’s Zacks Rank #3 and -0.8% ESP deter us
from being convinced as to whether earnings will beat or miss
expectations on Apr 16.
What is Directing Indifferent Earnings?
AmEx benefits from improved credit trends, new business
initiatives, strong capital ratios and return on equity (ROE) as
well as stable ratings. The positivity is backed by a trailing
four-quarter average surprise beat of 2.6%, although the
fourth-quarter 2013 generated a negative surprise of 0.8% due to
higher litigation costs.
Meanwhile, lower borrowing on cards along with rising payment of
outstanding debt may likely raise interest expense and impede
growth of loan fee income, thereby hampering the top line. Although
the company is keeping expenses in check, the impact of regulations
and lawsuits and higher loan loss provisions, given lower lending
reserves, raises potential risks.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post an
earnings beat this coming quarter:
Portfolio Recovery Associates Inc. (PRAA),
earnings ESP of +2.33% and a Zacks Rank #2 (Buy).
TD Ameritrade Holding Corp. (AMTD), earnings
ESP of +3.03% and a Zacks Rank #2.
CBOE Holdings Inc. (CBOE), earnings ESP of
+3.70% and a Zacks Rank #3 (Hold).
TD AMERITRADE (AMTD): Free Stock Analysis Report
AMER EXPRESS CO (AXP): Free Stock Analysis Report
CBOE HOLDINGS (CBOE): Free Stock Analysis Report
PORTFOLIO RCVRY (PRAA): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
TD Ameritrade (NASDAQ:AMTD)
Historical Stock Chart
From Mar 2024 to Apr 2024
TD Ameritrade (NASDAQ:AMTD)
Historical Stock Chart
From Apr 2023 to Apr 2024