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Globe and Mail
2 days ago
- Business
- Globe and Mail
Is American Express Worth Buying Right Now?
American Express (NYSE: AXP) is one of the stocks owned by Warren Buffett within Berkshire Hathaway 's stock portfolio. That fact alone is enough to get some investors to buy the stock. However, you really need to consider other factors, like the business behind the stock, as well as its price tag. Here's a look at whether American Express is worth buying right now. American Express has a great business American Express is a financial giant, acting largely as a payment processor. The company's logo adorns credit cards that get used in retail establishments and online. Each transaction generates fee income for American Express. It issues its own cards, too, so it generates card/membership fees directly from customers there, as well. One differentiation between American Express and its peers is that Amex, as it is often called, focuses on more affluent customers. Wealthier consumers tend to be more resilient during economic downturns. Basically, they have the money to keep spending even as less affluent consumers hunker down. That means that Amex's business will usually perform relatively well during recessions and other periods of economic uncertainty. So far, 2025 has been filled with uncertainty. From tariff fights to stock market corrections, the news has been filled with negative headlines. In fact, American Express' stock price fell along with the S&P 500 (SNPINDEX: ^GSPC) earlier in the year. And it has recovered along with the index as well, as investors regained confidence. What's notable, however, is that American Express' price moves have been more dramatic than the market's moves. AXP data by YCharts American Express is still below its high-water mark That's an interesting sign, since it could mean that Amex's stock has more recovery potential ahead of it. Given the strength of its business model, that isn't an unreasonable assessment. However, there's also a negative way to view the price swing. It could very well be that investors got overly enthusiastic about the business and bid the price up to unrealistic levels earlier in the year. And the return toward those levels just indicates that investors are, again, being overzealous with their expectations. A look at traditional valuation metrics, perhaps unfortunately, suggests the second explanation is the more likely one. American Express' price-to-sales ratio is currently around 3.1, compared to a five-year average of 2.6. The price-to-earnings (P/E) ratio is currently about 20.5, versus a longer-term average of just under 19. And the price-to-book value ratio is 6.6 today, compared to a five-year average of roughly 5. All three metrics suggest that American Express is expensive today. And they are buttressed by a nontraditional valuation tool: dividend yield, which falls as share price rises. American Express' dividend yield is about 1.1% today. Not only is that less than the already miserly 1.3% yield you could collect from the S&P 500 index, but it is also near the lowest levels of the past decade. Again, the direction is pretty clear: Amex looks expensive. American Express is a great business There's a reason Warren Buffett owns American Express. It is a well-run business with some clear advantages over its peers. Buffett didn't just buy Amex -- he's owned it for many years. And sticking with a good company is part of Buffett's investment approach. However, Buffett's mentor, Benjamin Graham, made an important observation that investors looking at American Express today should heed: Even great companies can be bad investments if you pay too much for them. And it looks like American Express is too expensive right now. Should you invest $1,000 in American Express right now? Before you buy stock in American Express, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor 's total average return is997% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
Yahoo
29-05-2025
- Business
- Yahoo
American Express (AXP) Stock Moves -0.14%: What You Should Know
American Express (AXP) closed the latest trading day at $293.36, indicating a -0.14% change from the previous session's end. This move was narrower than the S&P 500's daily loss of 0.56%. Elsewhere, the Dow saw a downswing of 0.58%, while the tech-heavy Nasdaq depreciated by 0.51%. Prior to today's trading, shares of the credit card issuer and global payments company had gained 10.01% over the past month. This has outpaced the Finance sector's gain of 5.39% and the S&P 500's gain of 7.37% in that time. Analysts and investors alike will be keeping a close eye on the performance of American Express in its upcoming earnings disclosure. The company is predicted to post an EPS of $3.84, indicating a 10.03% growth compared to the equivalent quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $17.69 billion, reflecting an 8.34% rise from the equivalent quarter last year. For the full year, the Zacks Consensus Estimates project earnings of $15.18 per share and a revenue of $71.27 billion, demonstrating changes of +13.71% and +8.06%, respectively, from the preceding year. It's also important for investors to be aware of any recent modifications to analyst estimates for American Express. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability. Our research shows that these estimate changes are directly correlated with near-term stock prices. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system. The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.01% upward. At present, American Express boasts a Zacks Rank of #3 (Hold). Looking at its valuation, American Express is holding a Forward P/E ratio of 19.35. This expresses a premium compared to the average Forward P/E of 10.85 of its industry. Meanwhile, AXP's PEG ratio is currently 1.43. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As of the close of trade yesterday, the Financial - Miscellaneous Services industry held an average PEG ratio of 0.97. The Financial - Miscellaneous Services industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 89, which puts it in the top 37% of all 250+ industries. The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Keep in mind to rely on to watch all these stock-impacting metrics, and more, in the succeeding trading sessions. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Express Company (AXP) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
21-05-2025
- Business
- Yahoo
American Express Company (AXP): A Bull Case Theory
We came across a bullish thesis on American Express Company (AXP) on Substack by Max Dividends and Serhio MaxDividends. In this article, we will summarize the bulls' thesis on AXP. American Express Company (AXP)'s share was trading at $296.17 as of May 20th. AXP's trailing and forward P/E were 20.68 and 19.57 respectively according to Yahoo Finance. Pixabay/Public Domain In a volatile 2025 market environment, American Express (AXP) has emerged as a premier dividend growth stock, blending its 175-year legacy with a future-focused strategy that appeals to both institutional investors and long-term shareholders. Distinguished by its integrated business model and premium customer base, AmEx ranks fourth globally in transaction volume behind UnionPay, Visa, and Mastercard but stands apart with its focus on high-margin, recurring revenue streams rather than riskier lending. This approach has earned the endorsement of Warren Buffett's Berkshire Hathaway, which holds a 21% stake, and supports the company's reputation for operational resilience and consistent capital returns. While its dividend yield currently stands at 1.1%, AmEx has delivered a 120% cumulative dividend increase over the past decade and raised its payout by 17% in 2025. Complementing this shareholder-friendly policy is an aggressive buyback program that has reduced shares outstanding by 30% since 2015, further enhancing per-share value. In 2024, AmEx reported $60.5 billion in revenue and $9.1 billion in net income, with a return on equity surpassing 30%, and its 2025 outlook calls for 8%–10% revenue growth and EPS between $15.00 and $15.50. A key growth driver is the expanding influence of Millennials and Gen Z, who now represent 42% of its customer base and 75% of new premium card acquisitions, fueling spending in travel and dining—areas up 18% year-over-year. AmEx continues to adapt through merchant expansion, digital innovation, and flexible payment tools like 'Plan It,' helping to fend off fintech and BNPL competition. With strong institutional backing and bullish analyst sentiment, AmEx offers both dependable income and long-term upside potential. Also, check out what we found about Visa (V). American Express Company (AXP) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 71 hedge fund portfolios held AXP at the end of the fourth quarter which was 62 in the previous quarter. While we acknowledge the risk and potential of AXP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AXP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
16-05-2025
- Business
- Globe and Mail
AmEx is Holding Strong: But is That Enough for Investors Right Now?
American Express Company AXP continues to showcase the strength of its premium brand in a volatile macroeconomic environment. Backed by a high-spending, affluent customer base and consistent earnings performance, the company has held up better than many of its peers. As one of Berkshire Hathaway's longest-standing holdings, AmEx is often regarded as a quality name. However, it's not immune to global headwinds. From tariff-related uncertainties to evolving credit risk dynamics and shifting consumer behaviors, near-term upside potential could be limited, even with a strong foundation in place. AmEx shares have gained 24.1% over the past year, outperforming the S&P 500's 11.2% growth and the broader industry 's 10% growth. Meanwhile, larger peers like Visa Inc. V and Mastercard Incorporated MA have done even better, gaining 29.5% and 26.9%, respectively. Price Performance – AXP, V, MA, Industry & S&P 500 AXP's Valuation Picture At first glance, AmEx appears attractively priced. It currently trades at a forward price-to-earnings (P/E) ratio of 18.76X, slightly below the industry average of 18.94X. However, that figure sits above its five-year median of 16.79X, suggesting the stock is relatively expensive by its own historical standards. It has a Value Score of C. By comparison, Visa and Mastercard command significantly higher multiples, with forward P/E ratios of 29.62X and 34.33X, respectively, reflecting their more scalable, lower-risk business models. What Sets AmEx Apart While American Express is often lumped in with traditional credit card companies, its structure is unique. Unlike Visa and Mastercard, which operate only as networks, AmEx is both a card issuer and a bank. This means it earns revenue not only from transaction fees but also from interest on outstanding balances. This structure offers advantages, especially in rising interest rate environments. While higher rates can curb spending, they also boost AmEx's interest income. Its first-quarter interest income of $6.1 billion increased 6% year over year. Also, its network volumes rose 5% year over year to $439.6 billion, fueled by strong U.S. consumer spending. AmEx also maintains a healthy balance sheet. As of the end of the first quarter, the company held $52.5 billion in cash and cash equivalents and just $1.6 billion in short-term debt. In 2024, it returned $7.9 billion to shareholders via dividends and share repurchases. It continued that trend in early 2025, returning $1.3 billion in the first quarter alone. In March, the quarterly dividend was raised by 17% to 82 cents per share. AmEx's strong fundamentals are reinforced by a loyal customer base, high card acquisition rates and strong retention. The stock is trading above both its 50-day and 200-day moving averages: technical signals that indicate sustained upward momentum. AmEx's Estimates & Earnings Surprise History The Zacks Consensus Estimate for 2025 EPS is $15.18, indicating 13.7% growth, with 2026 expected to grow another 14%. Revenue projections show year-over-year growth of 8.1% in 2025 and 8% in 2026. (See the Zacks Earnings Calendar to stay ahead of market-making news.) The company also has a strong history of beating expectations, having exceeded EPS estimates in each of the last four quarters with an average surprise of 5.2%. American Express Company Price and EPS Surprise AmEx's Risks to Consider Despite its strengths, AmEx isn't without risk. The company has heavier exposure to travel and entertainment spending, a segment that can experience sharp downturns during economic slowdowns. Recent growth has been driven by increased spending from Millennials and Gen Z in these categories, making it more vulnerable to shifts in discretionary spending. However, its affluent customer base is likely to be less susceptible to such scenarios. While American Express shows long-term promise, there are near-term headwinds worth considering. Rising expenses are a concern. AmEx's total costs have steadily increased: up 22% in 2021, 24% in 2022, 10% in 2023, 6% in 2024, and another 10% in the first quarter of 2025. While part of this stems from strong customer engagement and card usage, it still puts pressure on margin growth. Moreover, American Express remains more domestically focused than Visa and Mastercard, both of which have significantly expanded their global digital payments ecosystems. AmEx's reliance on lending and card volume growth may limit its flexibility in adapting to emerging non-card payment trends. And unlike its network-only peers, AmEx assumes credit risk from its cardholders. This dual role, issuer and processor, means it must manage both operational efficiency and portfolio quality, particularly as economic uncertainty rises. Final Verdict: Time to Hold American Express remains a fundamentally strong company with a premium brand, loyal customer base, and a unique dual-role model that generates diverse revenue streams. Its strong balance sheet, consistent shareholder returns, and solid earnings trajectory make it a compelling long-term story. However, rising costs, credit risk exposure, and macro uncertainties, especially in travel and discretionary spending, limit the stock's near-term upside potential. Given its current valuation and risks, AmEx has a Zacks Rank #3 (Hold) at present. For existing investors, staying the course makes sense. For new entrants, a wait-and-see approach might offer a more attractive entry point down the road. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Mastercard Incorporated (MA): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis Report
Globe and Mail
12-05-2025
- Business
- Globe and Mail
2 No-Brainer Dividend Stocks to Buy With $2,000 Right Now
Blue chip dividend stocks are usually considered stable long-term investments, but they lost their luster over the past few years as interest rates spiked. Rising rates made risk-free CDs and Treasury bills more appealing, while making it tougher for many companies to support their dividends with consistent profits. But as interest rates decline again, it might be smart to buy some of those blue chip dividend plays. So even if you only have $2,000 available to invest, you should consider buying and holding these two classic income stocks: American Express (NYSE: AXP) and Realty Income (NYSE: O). 1. American Express American Express is often considered a credit card company, but it's also one of the U.S.'s largest banks. Unlike Visa and Mastercard, which only issue co-branded cards instead of issuing any cards of their own, American Express is both a card issuer and its own bank. Its total number of active cards rose 4% to 123.3 million in 2024. Therefore, it generates its revenue from both card processing fees and interest payments on its outstanding loans. American Express controls a smaller slice of the global card-payments market than Visa and Mastercard, but that's an intentional business decision. Since it needs to back its own cards with its own balance sheet, it only issues them to lower-risk, higher-income individuals. The company is also better insulated from interest rate swings than Visa and Mastercard. Rising rates might curb consumer spending and credit card purchases, but they'll still boost its banking segment's net interest income. That balanced business model enabled American Express to grow its revenue and earnings per share (EPS) at compound annual growth rates (CAGRs) of 10% and 12%, respectively, from 2019 to 2024. From 2024 to 2027, analysts expect its revenue and EPS to have CAGRs of 8% and 13%, respectively. Those are rock-solid increases for a stock trading at 18 times forward earnings. The stock's forward dividend yield of 1.2% might seem low, but the company has raised its payout annually for 13 consecutive years. Its low payout ratio of 20% also gives it plenty of room for future dividend hikes. So if you're looking for an evergreen financial stock that offers an attractive mix of growth and income, American Express checks all the right boxes. 2. Realty Income Realty Income is one of the largest real estate investment trusts (REITs) in the world. REITs buy a lot of properties, rent them out, and split that rental income with their investors. They must also pay out at least 90% of their taxable income as dividends to maintain a lower tax rate. Realty Income owns a portfolio of 15,621 properties, which it leases to 1,565 different clients across more than 89 industries. It mainly focuses on recession-resistant retailers like drugstores, convenience stores, and discount retailers. Last year, its top tenants included Walgreens, 7-Eleven, Dollar General, and Dollar Tree, but no single tenant accounted for more than 3.5% of its annualized rent. And declining interest rates should make it cheaper for the REIT to purchase new properties. Some of its tenants have struggled with store closures in recent years, but the company's year-end occupancy rate still rose from 98.6% in 2023 to 98.7% in 2024. That figure has also never dropped below 96% since its initial public offering (IPO) in 1994. It can maintain that high occupancy rate because its stronger tenants are still expanding as its weaker ones contract. Realty Income pays its dividends every month instead of every quarter and has raised its payout 130 times since its IPO. It pays a forward annual dividend of $3.22 per share, which equals a yield of 5.7%. It expects its adjusted funds from operations (AFFO) to rise from a range of 0.7% to 2.1%, to a range of $4.22 to $4.28 per share this year, and easily cover those dividend payments. It also looks like a bargain at 13 times the midpoint of its estimated AFFO this year. That high yield, low valuation, and evergreen business model all make Realty Income an easy stock to recommend in this turbulent market. Should you invest $1,000 in American Express right now? Before you buy stock in American Express, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!* Now, it's worth noting Stock Advisor 's total average return is907% — a market-crushing outperformance compared to163%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 5, 2025
