American Express (AXP) shares experienced a decline of more than 2% as of early afternoon trading. This drop followed comments made by the company’s CFO, Christophe Le Caillec, at an investor conference, which tempered expectations regarding near-term revenue growth.
Le Caillec stated that current Wall Street expectations for the first quarter of 2025 are overly optimistic. Analysts predict revenue net of interest expense to reach approximately $17.1 billion. The CFO attributed the anticipated lower growth to factors such as one less day in the first quarter and a stronger dollar compared to December. He cited the impact of a stronger dollar and one fewer business day in the upcoming quarter as reasons for the adjusted outlook. For context, revenue, excluding interest expenses, saw a 9% increase in the fourth quarter of the previous year.
Despite the tempered expectations for Q1 2025, Le Caillec affirmed management’s confidence in the full-year guidance. The company reiterated its previously announced projections for 2025, which include 8% to 10% revenue growth and earnings per share between $15 and $15.50. Additionally, a 17% increase in the quarterly dividend is still anticipated.
American Express currently trades at over 20 times its forward earnings. While not historically its highest valuation, this multiple is considered elevated. However, the financial sector has experienced a significant improvement in recent months. This positive trend is attributed to factors like a steepening yield curve and increased market confidence in consumer strength. These broader economic factors suggest a potentially favorable environment for financial companies like American Express.
American Express benefits from a resilient customer base, expected to perform well even during economic downturns. The company is known for its strong management team and established business model. While long-term prospects appear promising, potential short-term pullbacks could present buying opportunities for investors.
