As a result of the issuance of its Q1 earnings report, American Express (AXP) is currently in the public eye as the most recent earnings cycle commences. American Express gains substantially if customer resilience persists, even though success in a high-interest-rate environment is not assured. Nevertheless, after examining the recently disclosed information, I maintain a positive perspective on AXP stock, expecting quarterly increases in share prices.
American Express's Loan Delinquency
Given the wider economic landscape and higher inflation during March, American Express faced ongoing skepticism regarding its capacity to acquire fresh clientele and sustain profitability. However, those concerns have been dispelled by the recently released quarterly data indicating that a substantial number of Americans continue to purchase and spend freely.
American Express disclosed $109.9 billion in loans during the first quarter of 2024, with loan delinquency rates averaging between 1.4% and 1.5% and write-off rates around 2.3%. Although this does not provide immunity from difficulties arising from sustained high-interest rates, it does suggest that debtors have thus far fulfilled their minimum payment obligations. This development is encouraging for the organization's financial well-being.
AXP Quarterly Earnings Outlook
The company's annual revenue increased by 11% to $15.8 billion, surpassing the consensus estimate by a narrow margin. In addition, the organization disclosed a noteworthy surge of 34% in net income, amounting to $2.437 billion, which was converted into $3.33 in earnings per share and exceeded Wall Street's $2.96 per share forecast.
Recent data offers promising observations regarding the inquiry into American Express's ability to attract younger demographics in the face of competition from fashionable fintech companies. Unexpectedly, American Express acquired over 60% of its new international clients in 2023 from Millennials and Generation Z, indicating that the company's engagement efforts with these age groups were fruitful.
Nevertheless, as Christophe Le Cadillac, American Express's CFO, points out, it is critical to acknowledge that this youthful clientele frequently consists of young professionals who reside in metropolitan areas. Even with this specific demographic focus, American Express still manages to draw in affluent urban consumers.
AXP Stock Forecast Technical Analysis
In the daily chart of AXP stock price, the ongoing buying pressure is potent. The current price hovers above the 100-day Simple Moving Average. Moreover, the 20-day Exponential Moving Average is working as immediate support, from which a bullish reversal is visible.
Following the latest bullish candle from the static 217.31 support line, the price is more likely to extend the buying pressure at the 259.71 resistance level, which is a crucial Fibonacci Extension level.
On the bearish side, exhaustion at the top with a bearish daily close below the 217.00 line could be a bearish opportunity, which might lower the price towards the 200.00 psychological line.
