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american-expresss-earnings-strong-card-fees-51579883117
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American Express’s Strong Earnings Show That People Still Want to Pay to Use an Amex
first_publish_headline|American Express’s Strong Earnings Show That People Still Want to Pay to Use an Amex
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https://www.barrons.com/articles/american-expresss-earnings-strong-card-fees-51579883117
Photograph by Justin Sullivan/Getty Images
American Express’s Strong Earnings Show That People Still Want to Pay to Use an Amex
American Express’s Strong Earnings Show That People Still Want to Pay to Use an Amex
American Express’s Earnings Were Strong. The Stock Is Higher.
Card fees were the fastest-growing revenue item for American Express in 2019.
American Express’s Strong Earnings Show That People Still Want to Pay to Use an Amex
Card fees were the fastest-growing revenue item for the company in 2019.
https://www.barrons.com/articles/american-express-stock-looks-like-it-had-a-great-year-appearances-can-be-deceiving-51577797200?mod=article_inline
https://www.barrons.com/articles/american-express-reports-earnings-heres-what-to-expect-51579790733
mailto:ben.walsh@barrons.com
American Express’s Strong Earnings Show That People Still Want to Pay to Use an Amex
By Ben Walsh
Photograph by Justin Sullivan/Getty Images
American Express stock rose almost 5% in the wake of the news,
American Express reported fourth-quarter results that surpassed analysts’ expectations for earnings per share and showed that consumers are still willing to pay for Amex cards despite intensifying competition.
American Express stock (ticker: AMEX) rose almost 5% in the wake of the news, disclosed Friday morning.
The company said it earned $2.03 a share from revenue of $11.4 billion during the quarter. According to FactSet, Wall Street had expected the company to report EPS of $2.01 and $11.4 billion in revenue.
Importantly, the company’s results showed that consumers are still willing to pay to have an Amex card. Seventy percent of new American Express cardholders choose cards with a fee, which can offer benefits such as cash back on purchases or frequent-flier miles.
And that preference is helping American Express’s financial results. Card fees were the fastest-growing revenue item for the company in 2019, and management said on a conference call with investors that it expects that trend to continue this year. Card-fee revenue grew 17% in 2019 and 20% year over year in the fourth quarter.
American Express has tried to become less reliant on charge cards and corporate accounts, its historical mainstays. The company appears to be pulling off that shift, which involves expanding the consumer credit-card business to generate more interest revenue. Its credit-card customers’ apparent preference for cards with fees will make that business stronger by providing a base of revenue that isn’t necessarily dependent on consumers rolling over unpaid balances.
Write to Ben Walsh at ben.walsh@barrons.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.