American Express (AXP) is a company with a very well known brand name and long corporate history. It now is pushing hard into new ways to generate revenues through both social networks and the newer forms of deal retailing, such as that offered by online coupon provider Groupon. Even as American Express takes the lead for offering new types of mobile payment plans, competitors Visa (V) and Mastercard (MA) also are making deals to offer new forms of mobile payments.
Currently, American Express is on a strong financial footing. Second quarter net income came in at $1.07 per share, up 30 percent from the 84 cents earned a year earlier. The results also handily beat the Wall Street consensus estimate of 99 cents per share. Revenues for the quarter increase 12 percent to $7.6 billion, up from $6.8 billion.
One interesting financial note, the company's loss provisions decreased significantly, down to $357 million from $652 million. The $357 million is not that large of a number in light of the $1.3 billion in profit American Express earned in just the one quarter.
American Express has put together several partnerships with social media firms such as Foursquare, LevelUp, and Facebook to offer coupon-less local deals to social web users. The aggressive partnerships are putting American Express in the lead for taking Groupon-style offerings deeper into social network marketing.
These offerings work in conjunction with the company's own mobile payment system, called Serve. The financial reports do not yet break out these items to show if these initiatives significantly enhance revenue growth.
The consensus 2011 earnings estimate for American Express is $4.17 per share, compared to earnings of $3.35 in 2010. Following the most recent earnings reports, analysts at Argus Research reconfirmed the buy rating on American Express and increased their target price to $65. The company reports next on October 20.
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