American Express Co.'s (NYSE: NYSE:AXP) third-quarter net income for 2023 reached $2.45 billion, or $3.30 a share, surpassing the previous year's Q3 earnings of $1.88 billion ($2.47 a share). This performance exceeded analysts' estimate of $2.95 a share, aligning perfectly with the FactSet consensus. A key factor to note here, as highlighted by InvestingPro Tips, is the company's high earnings quality, with free cash flow exceeding net income, which underscores the robustness of these results.
The company's total revenues net of interest expense rose to $15.4 billion from $13.6 billion, marking the sixth quarter in its record revenue streak. This growth was fueled in part by a 7% increase in total network volumes to $420.2 billion. According to InvestingPro data, the company's revenue growth for 2023.Q2 stood at 10.52%, an indication of its continued strong performance.
A significant factor contributing to this growth was a 13% surge in travel and entertainment spending, particularly restaurant spending. The fastest-growing consumer cohort, Millennial, and Gen Z consumers showed an 18% spending increase in the U.S., underscoring the brand's relevance across generations. This aligns with the InvestingPro Tip that American Express is a prominent player in the Consumer Finance industry, further solidifying its market position.
The company's provisions for credit losses increased to $1.2 billion from $778 million due to higher net write-offs. This increase was offset by a lower net reserve build, keeping credit metrics below pre-pandemic levels. However, it's worth noting that the company's liquid assets exceed short-term obligations, as per InvestingPro Tips, providing a safety net against such losses.
CEO Stephen Squeri expressed confidence in their long-term growth plan and emphasized their investment in value propositions in a steady-state macro environment. This confidence is supported by the company's robust market cap of 110.19B USD and a healthy P/E ratio of 15.18, as per InvestingPro data.
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