American Express (AXP) reported first quarter earnings on Thursday, April 23, which were fairly mixed. EPS came in at $1.98, beating consensus of $1.43, though we are not talking about apples and apples, since 41 cents represents an increase in credit reserves. In terms of actual numbers, American Express increased its reserves to $2.6 billion from $809 MM last year.

This beat on the surface may lead to a temporarily upside in shares but it should not mask bleak longer term prospects for the company. Further, we continue to emphasize that among its peers - Visa (V), MasterCard (MA), and Discover (DFS) - American Express remains a compelling Short story. (Note that we are currently Bullish on Visa and Discover, and Neutral on MasterCard though we believe that in the long run MasterCard is actually a Buy).

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