American Express Earnings: Strong Travel Spending and Card Fees Offset Weakness in Commercial Cards

Wide-moat-rated American Express reported decent second-quarter results that were modestly above our expectations, thanks to strong travel spending and net interest income growth. Net revenue increased 12% to $15.05 billion, and earnings per share increased 12% to $2.89. While year-over-year revenue growth did decelerate from the first quarter, this was expected as American Express is no longer benefiting from easy comparisons with pandemic-affected results. As we incorporate the strong loan growth and new card signups this year into our model, we anticipate that our $169 fair value estimate may rise by a mid-single-digit percentage. We still expect to view the shares as roughly fairly valued after the update, however.