American Express (AXP) shares dropped 4.6% on Thursday despite a strong first-quarter earnings report, which showed revenue of $18.9 billion and earnings per share of $4.28, both surpassing analyst expectations. Investors were likely disappointed by the lack of an upward revision to full-year guidance, as management reiterated previous forecasts of 9% to 10% revenue growth and EPS between $17.30 and $17.90. Additionally, concerns over increased spending on marketing and technology, particularly in artificial intelligence, may have contributed to the stock’s decline.
The market reaction underscores a broader unease as rising oil prices, driven by shaky peace talks in Iran, could signal economic headwinds. While higher fuel costs might increase spending for American Express cardholders, they also pose risks to the overall economy, which can negatively impact financial stocks.
For long-term investors, the current dip presents a potential buying opportunity, as AXP now trades at around 18 times this year’s earnings estimates, positioning it at the lower end of its historical valuation range.
Source: fool.com