Shares of financial services company American Express (AXP) gained in today’s trading ahead of its Q2 earnings results on July 19 before the market opens. Analysts are expecting earnings per share to come in at $3.26 on revenue of $16.379 billion. This equates to 12.8% and 19.6% year-over-year increases, respectively.
According to TipRanks’ “Bulls Say, Bears Say” tool, analysts point to faster loan growth and the potential for higher net interest income as reasons for this earnings growth.
Still, earnings per share should ideally grow faster than revenue as this demonstrates a high degree of operating and financial leverage in the business. Nevertheless, it’s worth noting that AXP has beaten earnings estimates five times out of the past eight quarters. Therefore, it’s possible that EPS growth will outpace revenue growth.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 4.69% move in either direction.
Is AXP Stock a Buy?
Turning to Wall Street, analysts have a Hold consensus rating on AXP stock based on eight Buys, nine Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 43% rally in its share price over the past year, the average AXP price target of $241.50 per share implies 4% downside risk.
