American Express reported second-quarter earnings that beat analysts' expectations Wednesday after the bell.
Here's how the company did compared with what Wall Street expected:
- EPS: $1.47 vs. $1.43, according to Thomson Reuters
- Revenue: $8.31 billion vs. $8.20 billion, according to Thomson Reuters
In the year-earlier quarter, the company reported earnings of $2.10 per share on revenue of $8.24 billion.
American Express reported net income of $1.3 billion, down 33 percent. The company said, however, it still had a relationship with Costco in the year-ago quarter.
The relationship ended last year. Visa and Citi now partner with Costco for its credit cards.
American Express Chairman and CEO Kenneth Chenault said the company has moved away from co-brand relationships in recent years that "no longer made economic sense." Instead, it has refocused on investing in its business and lowering operating costs.
"While each of those moves suppressed short-term results, we believed they would put us in a stronger position for the longer term," Chenault said in a statement.
The company's cost of card member services increased 24 percent this quarter, CFO Jeff Campbell said on a call with investors. He attributed the increase to premium travel services, including airport lounge access, a free first bag on Delta flights and a new Uber benefit on its platinum card.
"We continue to believe that this is an area where we can offer differentiated benefits, and we will continue to invest in card member services," Campbell said.
American Express said it's confident that it will see full-year earnings between $5.60 and $5.80 per share. Wall Street had projected $5.70 per share.
AXP intraday chart (after-hours movement in yellow)
Source: FactSet
The stock was down 1 percent in after-hours trading following the announcement after initially gaining 1 percent.
After passing the Federal Reserve's stress test, American Express announced last month it would increase its quarterly dividend to 35 cents per share starting in the third quarter.
The company also said it would buy back up to $4.4 billion of common stock between the third quarter of this year and the second quarter of next year.
American Express shares hit a fresh 52-week intraday high of $85.88 on July 5.
The stock has gained 16 percent so far this year, outperforming the Dow Jones industrial average's 9 percent gain.
Correction: American Express shares have surged 16 percent this year. An earlier version misstated the percentage change.