American Express Earnings: Strong Retail Spending and Lending Results Drive Growth

Wide-moat-rated American Express reported strong third-quarter earnings as strong consumer spending volume and a jump in net interest income more than offset meager commercial spending growth. Net revenue increased 13% from last year and 2.2% from last quarter to $15.4 billion. Earnings per share rose 33% to $3.30, though the company did benefit from its effective tax rate falling to 20.9% from 23.6%, which translates to a return on equity of 36.3%. As we incorporate these results, we do not plan to change our $178 fair value estimate, and we see the shares as modestly undervalued.