#What you need to know
American Express recently reported a notable increase in its first-quarter earnings, reaching $2.584 billion or $3.64 per share. This performance exceeded analysts' expectations, which averaged a predicted earnings per share of $3.47. The company's revenue also saw a 7.4% rise, totaling $16.967 billion compared to the previous year. Despite prevailing recession concerns, American Express continues to demonstrate the resilience of its premium customer base, featuring low delinquency rates and strong customer retention. A substantial portion of revenue is derived from predictable merchant and card fees, indicating a stable revenue mix. Additionally, the average transaction at American Express is significantly higher than that of its competitors.
#Why this is important for retail investors
Earnings growth: American Express' earnings increased and outperformed estimates, reflecting strong business performance.
Stable revenue source: The company benefits from a robust mix of fees that are less dependent on interest income, enhancing financial stability.
Strong customer base: The low delinquency and high retention rates point to a resilient premium customer demographic, mitigating risk for investors.
High transaction value: The average transaction size at Amex outpaces that of competitors, reinforcing its premium brand positioning.
#Relevant ETFs
SPDR S&P Bank ETF (KBE)
Financial Select Sector SPDR Fund (XLF)
iShares U.S. Financials ETF (IYF)
Invesco S&P SmallCap Financials ETF (PSCF)
First Trust Financials AlphaDEX Fund (FXO)
iShares U.S. Financial Services ETF (IYG)