American Express (AXP) Raises 2026 Profit Outlook, but Read the Fine Print

American Express (AXP) just raised its full-year profit forecast, and the headline numbers look terrific. Reported earnings per share jumped 31% to $5.42 on record third-quarter revenue of $20.1 billion.

Look one layer down, though, and the picture is more measured. A big one-time gain and a lower tax bill did some of the heavy lifting, which matters if you're trying to figure out what the business really earns.

Strip out the $982 million pre-tax gain from selling Amex's stake in Global Business Travel Group (net of restructuring costs), and adjusted EPS was $4.68. That's up 13% from $4.14 a year ago and about 5% above the $4.47 consensus, according to Zacks' post-earnings breakdown.

Revenue rose 9%, driven by higher Card Member spending, bigger card balances and stronger card fees, per the company's earnings release filed with the SEC. Zacks put the top line at $20.06 billion, a hair (0.34%) under consensus.

Credit looked healthy. Provisions for credit losses fell to $1.0 billion from $1.3 billion, helped by a reserve release rather than a reserve build, and the net write-off rate slipped to 1.8% from 1.9%.

Expenses climbed 9% to $14.5 billion, matching revenue growth. Amex pointed to higher variable customer engagement costs from rising spending and the refreshed U.S. Platinum Card, plus higher legal reserves and restructuring charges.

The tax line deserves a flag too. The effective rate fell to 18.1% from 24.1%, mostly on discrete benefits from resolving prior-period tax items. That's a tailwind you shouldn't count on seeing again next quarter.

"Our business momentum continues, with strength in billings, new acquisitions and Card Member retention, and excellent credit quality." — Stephen J. Squeri, Chairman and CEO, American Express

On guidance, Amex now expects 2026 EPS of $18.30 to $18.60 on a GAAP basis, or $17.60 to $17.90 adjusted. Management also reiterated it's on track for another year of 10% revenue growth.

MT Newswires, in a report carried by Yahoo Finance, said the prior range was $17.30 to $17.90 and that FactSet had been looking for $17.68. It doesn't specify whether the old range was GAAP or adjusted. If it was adjusted, the real change is a 30-cent bump to the floor while the ceiling stays put.

So what does this mean for your portfolio? Amex shares were down about 12% for the year going into the report, while the S&P 500 was up roughly 12%, according to Zacks. A cleaner, higher outlook gives the stock something to work with, but it's not a blowout.

The bull case rests on the customer. Premium cardholders keep spending, retention is holding up, and credit quality is strong. Amex is also trimming costs: Bloomberg reported the company is cutting about 5% of its global headcount, and the release shows a $336 million pre-tax restructuring charge tied to efficiency initiatives.

The risk is that investors have heard this story before. After the second-quarter report in July, shares fell about 6% when Amex chose to reinvest its upside in growth rather than lift profit guidance, as the Journal Record covered at the time. Heavy spending on rewards and the Platinum refresh can squeeze margins again.

Zacks carries the stock at a Rank #3 (Hold), and its industry group sits in the bottom 28% of the roughly 250 it tracks. Neither is a red flag by itself, but neither screams momentum.

Here's what to watch. Judge the stock on the adjusted figures, where the guidance midpoint is about $17.75. Then keep an eye on three things: whether expense growth stays at or below revenue growth, whether the write-off rate holds near 1.8%, and whether card fee growth speeds up as the Platinum repricing rolls through.

Bottom line: Amex is executing, but the quality of this quarter's EPS is lower than the 31% headline suggests. Anchor on $4.68, not $5.42.