Limited Downside Risk Going Into American Express Q4 2015 Earnings

At the moment it seems like things cant get any worse for American Express (NYSE:AXP). The stock is down almost 10% year to date which is on top of the 26% decline the stock suffered in 2015. American Express Q4 2015 earnings will be announced on the 21st of January and the consensus is an EPS of $1.13 a share which is down from $1.22 in Q4 2014. This stock gets hit immediately when partnerships fall through as the market is always forward looking and projecting top line losses from the lost partnerships. We saw this in 2015 with Costco (NASDAQ:COST) and JetBlue Airways (NASDAQ:JBLU) and 2016 is off to a horrible start with the loss of the Fidelity deal. The loss in income may be small from the Fidelity fall out but investors are nervous about possibly bigger losses down the road. Starwood Hotels & Resorts (NYSE:HOT), for example, looks increasingly precarious at the moment due to Marriott International (NASDAQ:MAR) taking it over recently.

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The Marriot group has its own relationship with JP Morgan Chase (NYSE:JPM) and may decide to cut ties with Amex in order to amalgamate everything under one roof. Furthermore, the DOJ ruling definitely was a catalyst for Amex’s stock decline in 2015 although things may be going in favor of the credit card company here. American Express initially lost its lawsuit against the US department of Justice last February but last month a US court granted a stay on the order meaning American Express can continue to forbid its merchant clients from steering customers to alternative (cheaper) forms of payment. I can see Amex now winning the ongoing appeal here and I must say I believe it would be the right decision. It always should be up to the customer when deciding the payment method and not the merchant. Merchants are always going to look out for their best interests but once the appeal is won, healthy competition in this market will return to take on Visa (NYSE:V) and Mastercard (NYSE:MA) who are dominating at present.