Nomura just upgraded the shares of this financial behemoth to ‘Buy’ and two analysts have increased their EPS estimates for the company in the past 30 days.
American Express (AXP)
From Jack Adamo’s Insiders Plus
American Express (AXP) reported a fourth-quarter GAAP net loss of $1.41 per share, compared with $0.88 a year ago. However, excluding the impact of the recently enacted Tax Cuts and Jobs Act, EPS for the quarter were up 79.5% to $1.58. For the full year, diluted earnings per share were $2.97, compared with $5.65 a year ago, but excluding the tax change, full-year EPS were up 4% to $5.87. The full-year comparison was hobbled by the discontinuation of the company’s relationship with Costco last year. We should see no impact of that in 2018, as the quarterly comparisons have now been lapped.
The company’s earnings outlook for 2018 has about 6% wiggle room, with expectations of full-year EPS of $6.90 to $7.30, which would be at least 17.5% above the 2017 level. At the current price of the shares, the stock has a trailing P/E of 16.5 and a forward P/E of 14. Since Amex presents very clean financials, these are trustworthy numbers. The price/earnings-to-growth ratio here is less than 1.0, and one is always a number I like to see in this context.
Because of the delicate condition and high P/E of the market, unless it’s a stock with a high and solid dividend, I will keep all new buys on a short leash. So, if we see a pullback of more than 5% or so, I may cut the line. For now, however, I think we’re not at the precipice yet, and I like the risk-to-reward here. Buy American Express up to $100.
Jack Adamo, Jack Adamo’s Insiders Plus, www.jackadamo.com, February 17, 2018