American Express surges on revenue beat, strong 2026 outlook
Card member spending grew 9% as FY26 EPS guidance of $17.30-$17.90 signals robust growth trajectory
American Express shares gained in morning trading on Friday after the financial services giant reported fourth-quarter revenue that exceeded expectations and provided robust guidance for 2026, overshadowing a slight earnings per share miss.
The New York-based company reported revenue of $18.98 billion for the quarter, a 10% increase from the prior year and above the consensus estimate of $18.92 billion. Earnings per share reached $3.53, falling one cent short of analyst expectations of $3.54.
Investors focused on the company's forward-looking statements, with American Express issuing FY26 EPS guidance of $17.30 to $17.90, which encompasses the analyst consensus of $17.40. The guidance range represents continued confidence in the company's growth trajectory following a year in which it reported strong performance.
Card member spending, a critical metric for the company's business model, grew 9% year-over-year during the quarter. This increase underscores the resilience of American Express's more affluent customer base even as economic uncertainties persist. The spending growth contributed to robust 9% revenue growth throughout 2025.
American Express currently pays a quarterly dividend of $0.82 per share, which reflects a 17% increase that was announced in March 2025. The dividend yield stands at approximately 0.9% based on the current share price.
Analysts have been largely positive on the stock heading into earnings. Wells Fargo maintained an "Overweight" rating and raised its price target from $400 to $425 in December, while Truist Securities upgraded its target from $395 to $420 with a "Buy" rating. The consensus analyst price target currently sits at $377.22, according to market data, suggesting upside potential from current levels.
The company's performance comes against a backdrop of broader strength in the payments sector, as consumers continue to spend despite elevated interest rates. American Express has benefited from its focus on affluent cardholders who have demonstrated greater spending resilience than lower-income consumers.
With a market capitalization of approximately $248 billion and a trailing price-to-earnings ratio of 24, American Express trades at a premium to some financial peers, reflecting investor confidence in its growth prospects and high-margin business model. The company's return on equity of 33.9% over the trailing twelve months demonstrates its ability to generate strong returns for shareholders.
Looking ahead, investors will be watching for continued card member spending growth and the company's ability to manage credit costs as the economic environment evolves. The 2026 guidance suggests management expects sustained momentum, though the forecast will depend on maintaining healthy consumer spending patterns and effective credit risk management.