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Why Shares of American Express Are Up Today

What happened

Shares of American Express (NYSE: AXP) traded nearly 10% higher as of 11:25 a.m. ET today after the company reported earnings results for the fourth quarter and full year of 2021.

So what

American Express reported diluted earnings per share of $2.18 on revenue of roughly $12.1 billion in Q4, easily beating analyst estimates. For the full year, American Express reported $10.02 EPS on total revenue of $42.4 billion, also beating estimates.

In the quarter, the company saw a nice uptick in loan balances, with period-end balances up more than 15%. Billed business in Q4 is up 33% from the fourth quarter of 2020 and up 12% from the fourth quarter of 2019. Spending related to travel and entertainment continued to recover, in Q4 2021 reaching 82% of levels seen prior to the pandemic in Q4 2019.

Image source: Getty Images.

Expenses of nearly $9.8 billion in Q4 came in at about $500 million over what analysts were expecting. American Express also released $168 million of reserve capital previously being held for loan losses, which helped boost earnings a bit.

"Our investment strategy enabled us to reach record levels of Card Member spending, maintain customer retention and satisfaction above pre-pandemic levels, increase new Card acquisitions, grow our loan balances, and deepen our digital engagement with customers," American Express CEO Stephen J. Squeri said in a statement.

Now what

Management is guiding for 18% to 20% of revenue growth this year and expects to generate between $9.25 and $9.65 of earnings for 2022. I like American Express' outlook, as loan growth recovers, travel and entertainment spend improves, and higher interest rates look likely to boost revenue. The company appears to be well positioned.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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