American Express Co. (NYSE:AXP) disclosed an increase in delinquency rates for its U.S. Consumer and Small Business Card Member loans in May compared to the previous month, according to a regulatory filing on Monday.
The credit card giant reported that delinquencies in its U.S. Consumer Card Member loans rose to 1.3% of total loans in May, up from 1.4% in April and March. The total loans for this segment stood at $84.0 billion as of May 31, 2024. For U.S. Small Business Card Member loans, the delinquency rate remained steady at 1.4% in May, equal to April but slightly down from 1.5% in March. The total loans for small businesses reached $28.2 billion.
American Express also reported net write-off rates based on principal only, with the U.S. Consumer segment seeing a decrease to 2.4% in May from 2.5% in April, while the U.S. Small Business segment experienced an increase to 2.5% in May from 2.2% in April.
The company noted that these figures do not directly correspond with the credit performance reported by the American Express Credit Account Master Trust in its monthly Form 10-D reports filed with the Securities and Exchange Commission. The trust's data may vary due to differences in loan characteristics, calculations, and reporting mechanics.
The statistics provided are deemed additional to the data reported by the Lending Trust, which includes securitized loans. The trust's ending total principal balance was $25.8 billion with an annualized default rate, net of recoveries, of 1.4% for the period ending May 31, 2024.
In other recent news, American Express has been the focus of several financial firms. Barclays maintained an Equalweight rating on the company, predicting a potential 10% revenue growth by 2024, largely driven by Net Interest Income contributions. Wells Fargo has also maintained an Overweight rating, viewing the current stock valuation as an investment opportunity. Citi, however, initiated coverage with a Neutral rating, setting a price target of $250.00 per share, based on lower revenue projections offset by reduced expenses.
BTIG also initiated coverage on American Express with a Neutral rating, citing potential challenges for consumer spending levels. Despite these concerns, American Express was recognized for its successful growth of new accounts in both Consumer and Commercial sectors. The company also received authorization from Russian President Vladimir Putin to voluntarily shut down its operations in Russia, marking a shift in international business relationships due to geopolitical tensions.
Lastly, Keefe, Bruyette & Woods maintained their Outperform rating on American Express, indicating potential upside for the company's stock. These are recent developments that investors may want to keep an eye on.
InvestingPro Insights
In light of American Express's recent financial disclosures, investors may find the following InvestingPro Insights particularly relevant. The company, known for its robust presence in the consumer finance industry, is trading at a P/E ratio of 18.52, which is considered low relative to its near-term earnings growth. This is further underscored by an adjusted P/E ratio of 17.87 for the last twelve months as of Q1 2024, suggesting a potentially attractive valuation for earnings-oriented investors.
With a consistent track record of dividend payments for over half a century, American Express has demonstrated a commitment to returning value to shareholders. The dividend yield currently stands at 1.25%, complemented by a significant dividend growth of 16.67% over the last twelve months. Moreover, the company's revenue has shown a healthy growth of 9.33% during the same period, indicating a solid top-line expansion.
For those considering an investment in American Express, note that the company has experienced a price uptick of 25.34% over the last six months, reflecting investor confidence. For more detailed analysis and additional InvestingPro Tips, such as the fact that American Express's liquid assets exceed short term obligations, visit InvestingPro. To enhance your investment strategy with more insights, use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 7 more InvestingPro Tips available that could guide your investment decisions in American Express.
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