American Express Company AXP reported fourth-quarter 2024 earnings per share (EPS) of $3.04, which beat the Zacks Consensus Estimate by a whisker. The bottom line climbed 16% year over year.

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Total revenues net of interest expense amounted to $17.2 billion, which also beat the Zacks Consensus Estimate by a whisker. The top line improved 8.7% year over year in the quarter under review.

The strong fourth-quarter 2024 earnings benefited from record high card member spending and fee growth. New card acquisitions and growth in the customer base of Millennials and Gen-Z are also driving growth in the U.S. Consumer Services Billed business. The results were partially offset by escalating customer engagement and marketing expenses.

Q4 Operational Performance

Network volumes of $464 billion rose 7% year over year in the fourth quarter, driven by higher consumer spending. The figure surpassed the Zacks Consensus Estimate of $458.7 billion. Total interest income of $6.1 billion increased 9% year over year but missed the consensus mark of $6.2 billion.

Provision for credit losses declined 10% year over year to $1.3 billion due to a reduced net reserve build partially offset by a rise in net write-offs.

Total expenses increased 11% year over year to $13.1 billion due to an elevated customer engagement cost level, which resulted from expanding Card Member spending and marketing expenses.

Segmental Performances

The U.S. Consumer Services segment’s pre-tax income of $1.5 billion improved 5% year over year in the fourth quarter and beat the Zacks Consensus Estimate of $1.2 billion. Total revenues net of interest expense climbed 12% year over year to $8.3 billion on the back of improved net interest income and higher Card Member spending. Growth in the customer base of Gen-Z and Millennials also favored this segment’s results.

The Commercial Services segment recorded a pre-tax income of $814 million in the quarter under review, which rose 22% year over year but missed the Zacks Consensus Estimate of $950 million. Total revenues net of interest expense amounted to $4.1 billion, which grew 8% year over year due to an increase in net interest income. The reported figure beat the consensus mark of $4.08 billion.

The International Card Services segment reported a pre-tax income of $34 million in the fourth quarter, which plunged 76% year over year and missed the consensus mark by a huge margin. Total revenues net of interest expense improved 11% year over year to $2.99 billion but missed the consensus mark by 2.9%. The year-over-year growth was attributable to expanding Card Member spending and rising card fee revenues.

The Global Merchant and Network Services segment’s pre-tax net income of $853 million improved 4% year over year in the quarter under review but missed the Zacks Consensus Estimate of $911.6 million. Total revenues net of interest expense declined 2% year over year to $1.9 billion.

Corporate and Other incurred a pre-tax loss of $490 million in the fourth quarter, narrower than the prior-year quarter’s loss of $589 million.

Balance Sheet (as of Dec. 31, 2024)

American Express exited the fourth quarter with cash & cash equivalents of $40.6 billion, down from $46.6 billion at 2023-end. Total assets of $271.5 billion rose from $261.1 billion at 2023-end.

Long-term debt amounted to $49.7 billion, up from $47.9 billion at 2023-end. Short-term borrowing was $1.4 billion.

Shareholders’ equity of $30.3 billion improved 8% year over year.

Return on average common equity improved 310 basis points year over year to 36.1%.

Capital Deployment Update

American Express bought back 3 million common shares in the fourth quarter of 2024. In the quarter under review, the company paid a per-share dividend of 70 cents.

AXP plans to increase its dividend to 82 cents per share beginning in the first quarter of 2025.

2025 Outlook

AXP anticipates revenues to increase between 8% and 10% in 2025 from the 2024 level of $65.9 billion. Management expects EPS in the range of $15-$15.5, the midpoint of which indicates an improvement of 8.9% from the 2023 level of $14.01.

Long-Term View

The company expects revenue growth of more than 10% over the long term, while EPS is likely to continue registering mid-teens growth.

AXP’s Zacks Rank and Key Picks

American Express currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Finance space are Primerica, Inc. PRI, Palomar Holdings, Inc. PLMR and Jackson Financial Inc. JXN. Each of these companies presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Primerica’s earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average surprise being 4.89%. The Zacks Consensus Estimate for PRI’s 2025 earnings indicates a rise of 5%, while the same for revenues implies an improvement of 4.5% from the respective 2024 estimates. The consensus mark for PRI’s 2025 earnings has moved 0.2% north in the past 0 days. 

Palomar Holdings’ earnings outpaced estimates in each of the trailing four quarters, the average surprise being 14.90%. The Zacks Consensus Estimate for PLMR’s 2025 earnings indicates a rise of 23.3%, while the same for revenues implies an improvement of 27.1% from the respective year-ago estimates. The consensus mark for PLMR’s 2025 earnings has moved 0.5% north in the past 60 days.

The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $18.85 per share, which indicates 46.8% year-over-year growth. It witnessed one upward estimate revision in the past seven days against no downward movement. The consensus mark for JXN’s current-year revenues suggests a 119.7% surge from a year ago.

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