American Express Co (NYSE:AXP) has disclosed its latest credit performance metrics for its U.S. Consumer and U.S. Small Business Card Member lending portfolios. The data, presented in an 8-K filing with the Securities and Exchange Commission today, reveals the delinquency and write-off rates for October, September, and August 2024.
The company's U.S. Consumer Card Member loans stood at $88 billion as of October 31, 2024, with a delinquency rate of 1.4% for loans 30 days past due, consistent with September's rate and slightly up from 1.3% in August. The net write-off rate for principal only was 2.4% in October, a noticeable increase from 1.9% in September and higher than the 2.2% rate in August.
For the U.S. Small Business Card Member loans, the total reached $30.5 billion by the end of October, with a 1.5% delinquency rate for loans 30 days past due, matching the rate of the previous month and up from 1.4% in August. The net write-off rate was reported at 2.2% in October, a slight increase from 2.1% in September and a decrease from 2.3% in August.
The combined total for Card Member loans in both U.S. Consumer and U.S. Small Business segments amounted to $118.5 billion.
Additionally, the American Express Credit Account Master Trust, which includes securitized loans, showed an ending total principal balance of $25.7 billion for the month ending October 31, 2024. The annualized default rate net of recoveries was 1.5%, with a total of $0.2 billion in loans being 30+ days delinquent.
The company notes that the characteristics of the securitized loans in the Lending Trust may not be identical to those of the total U.S. Consumer or U.S. Small Business Card Member loan portfolios, which include both securitized and non-securitized loans. The credit performance of the Lending Trust may vary on a monthly basis due to differences in loan mix, vintage, aging, and calculation methodologies.
In other recent news, American Express reported strong third-quarter earnings, surpassing expectations with earnings per share (EPS) of $3.49 and revenues totaling $16.6 billion, marking an 8% increase year-over-year. The company also raised its full-year EPS guidance to between $13.75 and $14.05. In the midst of these developments, American Express also underwent a significant business transaction, acquiring full ownership of Swisscard from UBS. This move followed UBS's divestiture of its 50% stake in the joint venture.
Analysts' opinions on American Express have been varied. TD Cowen maintained a hold rating on the company's shares, raising the price target to $268 from $260, reflecting a nuanced view of the company's recent financial performance. On the other hand, Baird increased its price target for American Express to $240 from $215, while maintaining an underperform rating due to concerns about the company's revenue growth and future outlook. Meanwhile, BTIG reiterated its sell rating on American Express, maintaining a $230 price target and expressing skepticism about the company's ability to achieve its 10% year-over-year revenue growth target.
InvestingPro Insights
American Express's recent credit performance metrics can be further contextualized with additional financial insights from InvestingPro. The company's market capitalization stands at $202.78 billion, reflecting its significant presence in the Consumer Finance industry. This aligns with the InvestingPro Tip highlighting AXP as a "prominent player" in its sector.
The company's P/E ratio of 21.22 and PEG ratio of 0.76 suggest that AXP may be trading at a reasonable valuation relative to its earnings growth potential. This is supported by an InvestingPro Tip indicating that AXP is "trading at a low P/E ratio relative to near-term earnings growth."
American Express has demonstrated strong financial performance, with a revenue of $59.24 billion over the last twelve months and a revenue growth of 8.94% during the same period. This solid growth trajectory is complemented by the company's dividend policy. An InvestingPro Tip notes that AXP "has maintained dividend payments for 54 consecutive years," underscoring its commitment to shareholder returns.
The company's stock performance has been particularly impressive, with a one-year price total return of 83.0% and a year-to-date return of 55.73%. This robust performance is reflected in the InvestingPro Tip mentioning a "high return over the last year" and that the stock is "trading near 52-week high."
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for American Express, providing a deeper understanding of the company's financial position and market outlook.
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